Wednesday, August 21, 2013

No great way to transport oil

This summer saw one of the worst oil industry-related accidents in Canadian history. Just after one o’clock in the morning on July 5, a runaway train that included 72 rail cars of crude oil slammed into the tourist town of Lac-Mégantic, Quebec. The train exploded into an enormous fireball, killing 28 people and destroying much of the downtown core. The clean-up is ongoing, and will be for a long time yet.

In the media, this event is most often described as being a railway disaster, with the focus being on the operating practices of the rail company (Montreal, Maine & Atlantic, or MMA), the need for more regulations on train operators, and who will pay (MMA is going into bankruptcy, its insurance is inadequate, and its assets are worth a trifle in compared with the destruction caused). While these are all valid concerns, I want to write further about how this disaster was an outcome of current dynamics in the North American oil industry.

Although the investigation is still ongoing, it seems that the following series of events occurred that night: The train was parked for the night at Nantes, Quebec, 10km uphill from Lac-Mégantic. The lone operator set handbrakes and left the train unattended (this is not unusual, but is a common operating procedure on smaller railroads (larger railway operators on busier lines typically have at least two operators)). A resident of Nantes called 911 that night to report the train was on fire. Firefighters came to extinguish the fire. At some point later that same night, the train began rolling toward Lac-Mégantic, eventually crashing into the business section of the village, where many of the victims were inside a popular night club. What caused the initial fire on the train when it was parked in Nantes and why the parking brakes failed (or were inadequately set) are not yet known.

A larger question is, why were 72 rail cars of crude crude oil parked in rural Quebec in the first place? The oil in question – over 100,000 litres in each car – was being shipped by train from oil fields in North Dakota to the Irving Oil refinery in Saint John, New Brunswick, where it was to be processed into gasoline and other oil-based products. If this strikes you as a very inefficient way to do things, that’s because it is. The geography of the North American oil industry is convoluted. Many of the most productive oil fields in North America are situated under the Great Plains, which stretch from Texas to Alberta and Saskatchewan (the other big producing areas are the Gulf of Mexico and the Tar Sands around Fort McMurray, Alberta (just to the north of the Plains), and there are many smaller, commercially viable fields elsewhere). A network of pipelines transfers the crude oil produced on the Great Plains to refineries for processing, most of which are located in the US Midwest and in Texas. As you can see from this map, the geographical orientation of this pipeline network, especially when you look at it from the perspective of the northern Great Plains, is primarily north-south (there’s one line that heads due west to British Columbia.

The largest North American markets for oil products are along the Pacific and Atlantic coasts; that’s where the greatest concentrations of people and industries are located. As you can also see from this map, no oil pipelines run to the US Pacific coast states (especially the enormous California market), nor are there any running to US east coast. In Canada, no oil pipeline flows any farther east than Sarnia, Ontario. There are oil refineries on the east and west coasts, but the crude oil they process comes mainly from overseas sources, brought in by tanker ships. This creates a number of challenges for oil companies operating in the northern Plains states and in Alberta and Saskatchewan. Production is growing in those areas because of new fracking technologies being employed in places like North Dakota, and new investments in the Alberta Tar Sands, but the pipelines heading south are operating at capacity. Proposals to construct a new southbound pipeline (the Keystone XL) and another one to Canada’s Pacific coast (the Northern Gateway) have been stalled by widespread public opposition. There’s also opposition to a plan to reverse the direction of a pipeline (known as Line 9, and which appears as a gray line on this map) that currently flows east-to-west from Montreal to Sarnia, so that it can transport Great Plains oil and Tar Sand product* eastward. This opposition stems from concerns that oil pipelines periodically spring leaks (which they do), that pipeline companies have a poor record of preventing those leaks and cleaning up spills when they do occur (which seems well-founded, if recent spills in Michigan and Arkansas are indicative), and that the environmental consequences of oil spills can be considerable (which they can).

The oil companies have not been sitting idly by hoping for more pipeline capacity to be built. Instead, they have been shipping growing amounts of crude oil to refineries by rail. This has turned out to be a good arrangement for the oil companies. They can ship their product to refineries well beyond the reach of existing pipeline networks, such as the Irving refinery in Saint John. Protesters have been successful in blocking new pipelines, but they tend not to pay much notice to trains running along tracks that are already built. It’s hard to know at a glance if any particular passing train happens to be transporting crude oil, since it goes into rail cars bearing anonymous black,cylindrical tanks that carry any number of different types of products. Rail companies typically refuse to disclose publicly the list of goods they transport, citing security reasons (they will notify fire officials when required to do so). Shipping crude oil has also been a profitable arrangement for the rail companies, who were hit hard by the economic downturn of 2008. The rail line operated by MMA had been unprofitable for many years, and MMA would probably already have been bankrupt were it not for crude oil shipments. As it stands, MMA will likely cease operating, but you can rest assured that crude oil will continue travelling along those tracks. In fact, the media is now reporting that the Irving company may take over the rail lines operated by MMA, to ensure its refinery will continue to receive shipments. I doubt if life in Lac-Mégantic will ever be the same. 

Most crude oil reaches its destination without incident, whether it is shipped by train, pipeline, or tanker ship. However, there is no perfectly safe way, failure-proof to transport oil. Spills and accidents do occur, and when they do, ecological and human communities are affected. Disasters like Lac-Mégantic capture our attention because they are spectacular, but they are also (thankfully) infrequent. We also pay attention to large oil spills that cause observable, immediate environmental harm, like the spills in Arkansas and Michigan I mentioned above. Again, though, these are relatively infrequent events given the overall volume of oil that is being transported by pipeline every day. Most oil spills are ones known as ‘operational spills’ – that is, small amounts of oil that get into the environment on a regular basis not because of accidents but because of small leaks, careless handling, or deliberate actions (such as oil tanker operators who rinse out their holds with seawater and pump the wastewater back into the sea – something that is illegal in North American coastal waters, but happens regularly elsewhere).** Individually, the impacts of operational spills are small, but over the course of years, these small amounts add up, and in areas where they occur frequently, contamination of water and soil can result.

The bottom line seems to be this: so long as consumer demand for oil continues to grow, the need to transport that oil to refineries will also grow. I fully understand and support the actions of those who are challenging the construction of new pipelines. However, there is a consequence to this: when we say ‘no’ to pipelines, we say ‘yes’ to moving oil by trains, and ‘yes’ to continued imports from overseas by tanker ships that put coastal and marine ecosystems at risk. We do not actually stop or constrain the transport of crude oil, we mostly just divert it to other means. My preference would be that all North Americans simply consume a little less oil each year, thereby obviating the need for greater oil transport capacity. While I have gladly foregone a car in favour of a bicycle, and buy as little plastic as possible, I recognize that many of my fellow citizens can’t or won’t follow suit. A litre of gas costs less than a litre of soda pop, and plastic is so ridiculously cheap it costs more to recycle it than to throw it away and make more new plastic. It is hard to change people’s consumptive behaviour given these realities. And, so long as the spills and accidents continue to happen to other people in other places, most North Americans will remain uninterested in how or where oil is transported.

Given the present dynamic, the most pragmatic step in my view is to allow the construction of new pipeline capacity for transporting oil to domestic refineries, but with much stricter regulations, inspection requirements, monitoring, and emergency response capacity, all of which would be paid for directly by the oil industry itself. Yes, these costs would eventually be passed on to the consumer, but it seems fair and logical that when we buy oil products we should share in the costs of delivering them safely. Based on the evidence that is available, the future frequency of operational spills and catastrophic accidents per unit of oil delivered is likely to be lower for well-maintained pipelines than for rail transport. An important thing to note here is my emphasis is on pipelines that terminate at refineries serving North American consumers; I am not in favour of constructing pipelines whose primary purpose is to deliver oil or Tar Sands product to ports for export overseas. In my view, too few people would benefit from such pipelines to make the risks worth taking. And in that instance, the refusal to increase pipeline will not lead to as great an upswing in rail transportation, because the finite capacity of railroads serving deep water ports effectively limits the amount of oil than can be moved by trains.

*I deliberately use the term ‘Tar Sands product’ because what gets transported from the Tar Sands to the refinery is not crude oil in its conventional sense, but a low grade, tar-like substance that is diluted with a mix of chemicals to make it more viscous. Crude oil is a much more valuable and less toxic product.

**For a more detailed global analysis of oil spills, see Jernelöv, A. (2010). The Threats from Oil Spills: Now, Then, and in the Future. Ambio, 39(5-6), 353–366.

No comments: