Canadian Freight Train Catches Fire After Jumping Rails

A Canadian National Railway Co. train carrying crude oil and propane derailed in New Brunswick province, sparking a blaze that routed about 150 people from their homes and was still burning more than 12 hours afterward.

The train stopped unexpectedly yesterday near the town of Plaster Rock after “an undesired emergency brake application,” the Transportation Safety Board of Canada said. Five cars held western Canadian crude and four had liquefied petroleum gas, Canadian National Chief Executive Officer Claude Mongeau said.

“My first words would be to apologize to the citizens of Plaster Rock for the inconvenience,” Mongeau said today at a televised news conference in the town, where other executives from the Montreal-based carrier also gathered. “There are some dangerous goods in the derailment.”

While no one was injured, the crash came only nine days after another oil-train derailment, in North Dakota, and added to the attention on crude-by-rail shipments. Volumes are rising amid a boom in shale-oil production as the U.S. government weighs whether to approve TransCanada Corp.’s proposed Keystone XL pipeline.

The safety debate was punctuated by the runaway crude train that exploded and killed 47 people in July in Lac Megantic, Quebec, Canada’s deadliest rail disaster in more than a century.

Brake Incident

Dan Holbrook, a safety board spokesman, said the Canadian National train’s crew reported the brake incident. They found one car near the front of the train had derailed and then discovered 16 more off the tracks near the back, where the crude and propane were carried, he said in a telephone interview. The crash occurred about 7 p.m. local time yesterday.

Safety board investigators don’t know how soon they will be able to gain access to the site, Holbrook said.

Crude from the 122-car train was burning today, Mongeau said. The oil was bound for Irving Oil’s refinery in Saint John, New Brunswick. He said the impact on the environment and air quality “seems to be very contained, and hopefully will be very manageable.”

“The fire is our first priority at the moment, dealing with it,” Mongeau said. “We have the equipment, we have the people and we have all the procedures in place to deal with it in a safe manner.”

About 150 people were evacuated as a result of the derailment, Greg MacCallum, director of the New Brunswick Emergency Measures Organization, said at a televised press conference today.

Shares Fall

Canadian National fell 1.6 percent to C$58.63 in Toronto. They rose 34 percent last year.

Rail accidents involving dangerous goods are on the rise in Canada, with 132 such cases in the first 11 months of 2013, a 19 percent jump from a year earlier, according to the safety board. The previous five-year average was 124.

That increase came amid a decline in Canadian rail accidents of all types. Through November, the tally of 883 marked a 5.7 percent drop from a year earlier, and the previous five-year average was 987.

Canadian energy producers are backing proposals to move as much as 1.1 million barrels a day by rail in the next three to five years, according to the Canadian Energy Research Institute. That’s up from 224,000 barrels a day last year, according to a Peters & Co. report from August.

U.S. Oil

In the U.S., about 11 percent of crude oil output moved by rail last year, according to data from the American Association of Railroads. That’s up from a “negligible amount a few years ago,” the trade group said.

Canadian National’s train originated in Toronto and was heading for Moncton, New Brunswick, said Jim Feeny, a spokesman. Canadian National has an alternate line available until the eastern part of its mainline has been cleared, he said.

Crude by rail is a fast-growing, if small, business for most North American carriers.

Canadian National’s revenue from crude oil shipments in 2013 probably amounted to about C$400 million, or 3 percent to 4 percent of sales, CEO Mongeau said at an investor meeting in Toronto last month. The railroad may double its crude business in the next two years, Mongeau said.

“You can count on that, if we continue to move it safely,” Mongeau said Dec. 11.

Canadian National carried about 70,000 carloads of crude oil last year, more than doubling 2012’s tally and a 14-fold increase over 2011, a slide presentation posted on the railroad’s website. Four years ago, it didn’t ship any crude.

Before it's here, it's on the Bloomberg Terminal.