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A Quebec train disaster that killed at least five people and left about 40 missing promises to touch off debate over the safety of shipping crude oil by rail or pipelines such as TransCanada Corp. (TRP)’s Keystone XL.
According to Bloomberg, as authorities began investigating the derailment and July 6 explosion of refinery-bound tank cars hauled by Montreal, Maine & Atlantic Railway Ltd., Quebec’s Green Party demanded stricter regulations and an energy industry association predicted tough scrutiny ahead for rail carriers.
As North America's energy boom advances will we see a productive, safe and responsible balance develop between rail and pipeline carriers? How might that come about?
“People think rail is costless until something like this happens,” said John Stephenson, a Toronto-based fund manager with First Asset Investment Management Inc. who helps manage C$2.7 billion ($2.65 billion). “This is another data point that shows how much costlier and riskier rail is compared to pipelines and will probably move Canada closer to having an energy strategy.”
Bloomberg reports that added North American oil production and a lack of pipeline infrastructure has boosted the amount of crude moved by rail, which reached record levels last year, according to the Association of American Railroads. TransCanada and Enbridge Inc. (ENB) are among the pipeline companies that have proposed multibillion-dollar projects to bring more oil to market from booming fields in Alberta and North Dakota.
Right about now one has to wonder what California residents and their elected officials are thinking. You'll recall that back in April Kinder-Morgan proposed a 277,000 barrel per day 'Freedom' pipeline that would transport light sweet crude from the West Texas Permian Basin to refiners in Los Angeles and southern Cal.
The major refiners such as Valero, Tesoro and Phillips 66 all declined on the opportunity. They opted instead to continue to rely on railroads and barges to deliver fuel from N. Dakota, Canada and Texas. Let's hope millions of Californians won't have to pay for that short-sightedness.