“Pipelines are a safer/ better option that transporting oil by rail.”
This argument has been a favourite one in Northwestern Ontario, where transcontinental rail lines run right through the heart of many communities, and it formed the basis of an April 2014 resolution endorsing Energy East, passed by the Northwestern Ontario Municipal Association at their annual meeting. Below, we share the deputation to Kenora City Council given by Kenora resident, Teika Newton, on May 13, 2014 in response to this argument.
Good morning Mr. Mayor, City Councillors, members of the press, and fellow citizens of Kenora. My name is Teika Newton, and I am here today to address a troubling resolution endorsed by regional municipal leaders at the recent NOMA conference, and to set the record straight on some facts that are clearly misunderstood by many around the NOMA table.
NOMA resolution #2014-12, entitled “Support of TransCanada Pipelines Energy East Project” was passed through an unrecorded vote at the NOMA Annual General Meeting, April 24. The basis of this resolution was ill-informed and flawed, not to mention that the resulting decision appears, to my eye, to undermine a valid representational democratic process, proceeding as it did with no formal consultation or input from any of the region’s constituents prior to the vote.
The rationale for the resolution was founded upon the belief that endorsing Energy East would result in regional safety improvements in the transportation of hazardous petrochemical goods. Namely, the resolution stated: “…rail accidents involving cargo of fossil fuels have had devastating results including significant loss of life; and …shipping crude oil by pipeline is a much safer way of transporting such a commodity than by rail car or truck…”
The disaster at Lac Megantic last summer brought the inherent dangers of shipping hydrocarbon cocktails by rail to the forefront for Canadians. More recently, on April 30, a 14-car derailment in Virigina similarly resulted in a massive explosion and leak of oil into the James River, to devastating environmental effects. Yet the practice of shipping hydrocarbons by rail continues not only unabated, but at an ever-expanding volume.
Few of us feel capable of providing an informed critique of our national energy transportation infrastructure, beyond recognizing in our guts that it seems “wrong” to ship volatile, explosive, highly toxic and polluting hazardous materials along exposed corridors through the hearts of our towns and cities, along, above, and across our waterways, and through our rough and unguarded wilderness.
Playing to these fears, the pipeline industry is endeavoring to push for the relative safety merits of pipelines versus rail. For example, speaking about Energy East, Vice President of Summit Pipeline Services, Tyler Madigan, told Northwest Newsweek on March 28, “It’s staggering how many rail cars or how many transport trucks we would require to move the volume of oil that we would move through this pipeline. And the safety statistics of a pipeline versus transport or rail, they’re not comparable.”
If this is the only message municipal leaders are hearing, it is no wonder, then that they would choose to endorse a relatively safer pipeline over the dodgy railway as an option for transporting dilbit and crude oil across Canada. But if we pause to give the matter critical consideration, several questions come up for review and demonstrate that with or without pipelines, so long as we depend on fossil fuels for energy, rail is here to stay, as is the shipment of hazardous petrochemicals via rail.
First, we need to consider the costs involved in constructing new infrastructure, including looking at the longevity of given resource developments, and how best to service these with suitable transportation networks. Rail is an existing transcontinental transportation network, and has been made more effective as a conduit for oil by simply increasing the number of rail cars. In Canada, transportation of oil by rail increased 28,000% between 2008 – 2013. Major investors, such as Warren Buffet, have contributed massive amounts of capital into tanker car manufacturers such as Greenbrier, or have subsidized the expansion of rail networks into unconventional oil fields such as the Bakken shale field that stretches from North Dakota into southern Saskatchewan and Manitoba. Torq, a Calgary based energy transportation company, is building a $100 million rail hub in Kerrobert, SK, to accommodate all the oil that crosses here, from sources such as the Bakken, the Alberta oilsands, and conventional oil fields throughout the Canadian prairies.
It is relatively cheap to extend rail spurs into short-term fracking fields where wells are productive for only a few years, and relatively easy to rip up the rails when the wells run dry. Pipeline, on the other hand, has a much longer upfront construction cost, which must be amortized over a long lifetime. Energy East, for example, would amortize its cost over the pipeline’s projected lifespan of 40 years. According to a benefits study by Deloitte commissioned by TransCanada, Energy East, for example, is expected to cost $11.3 billion, and because this project is for the most part a conversion of an existing pipeline, this cost is relatively low, at approximately 54% less cost than would be expected for a new build. By comparison, the much shorter proposed Enbridge Northern Gateway line has an estimated price tag of $7.8 billion, while a more recent entrant to the BC –Alberta pipeline mix, the Eagle Spirit proposal, comes in at more than $20 billion. Though the Kerrobert rail hub seems like a sizeable investment at $100 million, compared to pipeline costs, rail infrastructure development costs are paltry.
We also need to look at the capacity of new and existing infrastructure to carry existing and future volumes of product to market. Currently, Alberta’s oil sands manufacture about 1.8 million barrels of oil per day (bpd). Canada’s federal government projects that with expanded development, the oil sands will be producing 5.2 million bpd by 2030. Current energy transportation infrastructure to move product from Alberta to other markets can handle about 3 million bpd, through a combination of rail, pipeline and truck transport. Energy East would be able to transport 1 to 1.1 million bpd. Assuming anticipated production quotas are met, this still leaves a residual unmet capacity of 1.1 million bpd that needs to find its way from Alberta to market. Perhaps this will be accommodated by any of the more than a dozen proposed pipeline projects currently on the table, but almost undoubtedly rail will continue to be a part of the transportation mix simply because it already exists and does not present the cost barriers of pipeline construction.
On the safety and environmental risk side, we need to look at response times and potential volumes released in disaster scenarios, and we need to look at past track records for safety breaches and spills. While rail may seem, on the surface, a riskier way to move product, because the product is compartmentalized in relatively small containers (tanker cars), rail spills tend to involve less product being released into the environment than is the case for major pipeline ruptures. Rail tanker cars range in volume from about 15,000 gallons to about 31,000 gallons. Only the largest sized cars are rated to carry crude oil. Even so, a major disaster like the one at Lac Megantic, which involved 72 cars, released an estimated 100,000 L – still a whopping amount of pollution, but not in comparison to what is leaked by pipelines.
Even though there are more rail spills than pipeline spills, pipelines spill about three times the volume that trains spill. Steven Guilbeault, cofounder of Equiterre, wrote an article for the Globe and Mail last July in which he reported that “Between 2006 and 2012, 28 millions litres of oil spilled in Alberta alone from pipelines. [Enbridge] spilled an average of 1.9 million litres of oil per year between 2007 and 2011.” A TransCanada rep told me at their community Open House for Energy East back in September, many pipeline leaks happen around valves and at pumping stations, and rarely is there a leak due to an actual pipeline failure.
And yet these, too, have happened. In our area, Canadian Mainline 100-1, the oldest of the gas carrying pipes, suffered a rupture due to stress corrosion cracking near Stewart Lake on December 11, 1996. More recently, a blowout along the TransCanada mainline near Otterburne, MB occurred earlier this year. A rupture in line 100-4, the one that will be converted to carry oilsands bitumen through Kenora if Energy East gets approved, had a blowout at Rapid City, MB on July 29, 1995. Considering the pressure under which material flows through the pipe, and the diameter of the pipe, one can estimate that about 500 gallons per second of product will flow past a given point on the TransCanada Canadian Mainline.
At their September 2013 Energy East open house, TransCanada officials indicated shut off values would likely be placed every 15 km, and disaster response times would be no more than ten minutes to have the flow shut off. 500 gallons per second x 10 minutes equals 300,000 gallons, or roughly 1.2 million litres, ten times more than was spilled at Lac Megantic. When all these factors are considered, the safety and integrity of pipeline transportation comes out as not markedly better than rail, and in fact, may present a far larger magnitude threat when it comes to potential spill volumes.
Finally, it is important to note that if Energy East does proceed, with NOMA’s endorsement, it is certain that rail will continue to be the conduit for moving the naptha-benzene diluent from east to west, ensuring that our city and our regional environment will still be at just as much risk as ever from petrochemical transportation.
The product that is to be carried by Energy East isn’t, as the NOMA resolution stated, simply crude oil. It is a form of synthetic, unrefined heavy hydrocarbon, called bitumen. Bitumen is a mixture of sand and the heaviest fractions of hydrocarbon petrochemicals. In its raw state, it has the consistency of gritty peanut butter, and it behaves much more like a solid than a liquid. In order to make it flow through a pressurized pipeline, it must be diluted with a solvent to make it runnier. This solvent is a mixture of naptha, benzene, toluene, xylene and other unspecified, highly volatile petrochemicals. Canada imports this diluent from the Middle East, mostly Saudi Arabia, and it ships it via rail from East Coast seaports to the production fields in Alberta. If the Energy East project becomes operational, the pipeline would carry the diluted bitumen from west to east, where it would be upgraded in coastal refineries before being shipped overseas, and the diluent would be recovered, and shipped back west via rail. Pipeline and rail will operate as a twinned transportation system. 
So where does this leave communities that are trying to grapple with how best to protect themselves from potential threats from fossil energy transportation infrastructure?
First, we need to remember that oil by rail and oil by pipeline are not mutually exclusive options, and honestly, both are pretty bad. While government and industry may suggest that projects like Energy East are in our nation’s best interests, in fact, locking us in to such long term fossil energy investments may be one of the riskiest policy decisions we could make right now as we are entering a time when much of the globe is starting the necessary and inevitable transition away from fossil fuels and toward cleaner, more sustainable alternatives.
For example, in January, a group of more than a dozen high-powered financial endowment funds formed the Divest-Invest Philanthropy coalition, and pledged to divest $2 billion in fossil energy assets. More recently, cities such as Portland, Seattle and San Francisco, as well as several universities including Stanford University, have endorsed similar divestment plans. The reason wise investors are growing cagey about fossil energy investments is because it is expected that the bottom will soon fall out of the fossil energy sector. Why? Because, to put it simply, if we burn all the fossil fuel that the energy companies currently have on their books as their assets and operating capital, we will create conditions on the planet that are too hostile to support human life. The energy companies are in a position where they are going to have to eat the loss of an estimated $6 trillion in unrealizable wealth, and this makes investors nervous. Just last week, the Carbon Tracker Initiative made financial news headlines with its report that continued oil expansion would jeopardize an estimated $1.1 trillion of investor capital in stranded carbon assets.
This is perhaps beyond the scope of concern for a municipal council, but it is a point worth considering and understanding. Do not be misled into believing that expansion of the oil and gas sector is necessary for our country’s continued financial prosperity. In fact, this sort of investment may well spell our nation’s future financial ruin, and in the meantime, also bear in mind that the entire Alberta oilsands enterprise contributes only 2% to Canada’s GDP. Conventional oil and gas production makes up another 4% of GDP, but 94% of our country’s wealth comes from sectors other than the petrochemical industry. In fact, even the beer economy in Canada employs more people (163,200) than the oil industry (112,000)!
In an ideal world – in a responsible, ethical, life-affirming world, we would be rejecting the expansion of oil transportation infrastructure outright. We would be investing in research, development, and implementation of viable renewable and clean alternative energy solutions, and the local businesses that deliver them. We would also be careful to do our homework, to read widely and listen well, and to make well-informed, educated, and careful decisions only after much deliberation and consultation with experts and with our neighbours. Now is the time to ask the hard questions and to have a clever, critical eye, because we are on the brink of monumental change, and we will only have one opportunity to get this right.
 See the heading “ Wasting Away – Again” in this Transportation Safety Board publication. http://c220.127.116.11.tidc.telus.com/eng/publications/reflexions/pipeline/2002/numero-issue_3/pipeline-numero-issue-3-sec1.asp
 “ The main source of diluent is condensate that is recovered from processing natural gas in western Canada. This source of condensate is declining while the needs of growing bitumen production already exceed this supply and continues to grow. In 2012, over 260,000 b/d of imported condensates, diluents from upgraders, as well as quantities of butane were needed to supplement the condensate supply from natural gas wells.” (Canadian Association of Petroleum Producers, Crude Oil Forecasts, Markets & Transportation – June 2013, p. 8; http://www.capp.ca/getdoc.aspx?DocId=227308) While the current US shale gas fracking boom is presently producing enough condensate to meet immediate needs, this may be a transitory source of condensate as fracking operations are, by nature, transitory, lasting on average 3-5 years per well. Historically, Saudi Arabia has been the world’s largest producer of natural gas and is in the future – possible as soon as a decade – likely to again become a primary source for condensate used to dilute bitumen.
 Canadian Association of Petroleum Producers, Crude Oil Forecasts, Markets & Transportation – June 2013; http://www.capp.ca/getdoc.aspx?DocId=227308See pages 8 and the section starting on page 28 for a detailed discussion of diluent (p. 8) and a justification for the long-term use of rail as part of the transportation mix (p. 28) for oil, diluted bitumen, and other petrochemical products.