Oil booms in North Dakota’s Bakken shale formation and Alberta’s oil sands have left producers scrambling for ways to get their crude to market. Both regions have seen production develop faster than the infrastructure necessary to transport oil to refineries, and as such, drillers have been forced to get creative. Lacking pipelines, the most robust and cost-effective option for these kinds of massive onshore operations, producers have been sending their crude by rail, but in doing so have run the very real risk of explosive derailment.As more and more crude rides the rails, the risk of disasters like the kind seen in Quebec’s Lac Megantic last summer increases, which explains why the Department of Transportation has been preparing rules to phase out older train cars seen as particularly vulnerable to rupture. So as not to unduly upset the railroad industry, the DOT has pointed out that Canadian producers will be able to use the retiring cars to ship tar sands oil, which is a less explosive variety than Bakken shale crude. But Reuters reports, it looks like Canada won’t want to use these older tankers to transport oil, either:
[P]lans would modernize the current U.S. fleet of roughly 90,000 tank cars with puncture-resistant shells and other costly upgrades that government and industry sources expect to cost more than $3 billion…The U.S. Department of Transportation has said the transition will be eased with about 23,000 existing cars going into service to cart Canadian oil sands crude – a molasses-like fuel, bitumen, that is less flammable than ordinary crude oil.“No cars will retire as a result of this rule,” the DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) said in its oil train proposal released in July. […] But industry experts said it is not feasible to simply retrofit the older cars to the specifications needed to carry oil sands, making it likely thousands of cars will be scrapped.
One can understand why oil-by-rail arose in the first place, given how quickly the shale boom and development of Canadian oil sands have come. But what were meant initially to be stop-gap measures are now being perceived as more permanent solutions because we’re not building pipelines to connect these new oil reserves with refineries. And so, while the U.S. and Canada dicker over what to do with prone-to-puncture rail cars, the eminently more sensible option—the Keystone XL pipeline—languishes in political purgatory.When it comes to transporting crude, pipelines are safer and more efficient than railroads. That, if for no other reason, ought to compel President Obama to approve the Keystone pipeline.