Government speeds up phase-out of rail tankers

  • 26 Jul 2016
  • The StarPhoenix
  • DAMON VAN DER LINDE
  • Financial Post

Government speeds up phase-out of rail tankers

MONTREAL The federal government will retire the type of rail tanker cars involved in 2013’s deadly explosion in Lac-Megantic, Que., several months earlier than planned, in part because of a decrease in oil demand easing transportation pressures.

On Monday, federal Minister of Transport Marc Garneau issued Protective Direction 38, mandating that DOT-111 tank cars will no longer be able to transport crude oil or other dangerous goods on Canadian railways as of Nov. 1.

The accelerated timeline will phase out DOT-111 tank cars without a thermal layer of protection six months early and those with a thermal layer 16 months ahead of its original May 2018 schedule.

“We’re doing this for municipalities that see crude oil shipped through them. We’re doing this to reduce damage to our environment and most importantly we’re doing this to protect all Canadians by making the shipment of dangerous goods safer,” said Garneau at a news conference in Montreal Monday.

“The participation of our stakeholders in the oil industry is crucial. I thank them for their collaboration in making this happen.”

John Byrne, the vice-chairman for the Railway Supply Institute Committee on Tank Cars says that because of a global decline in demand for crude oil, there is a surplus of other cars available.

Byrne, whose committee represents companies that build more than 95 per cent and own or lease more than 70 per cent of tank cars operating in North America, says there has already been a voluntary move toward replacing the DOT111s, which have been described as vulnerable to punctures even at low-speed impacts.

“We would be concerned if market conditions improved for crude, but the way things are this is certainly doable,” he said.

“But if market conditions were to change, there could be some constraints as to how quickly the industry could respond.”

According to the Association of American Railroads, only about four per cent of the cars moving crude in the first quarter of 2016 were the legacy DOT-111s.

Transportation consultant Tom Williamson says the DOT-111 makes up less than 15 per cent of the total North American tank car fleet, with more than that sitting idle today because of pipelines, oil prices and an “overbuilt” industry.

“There are a lot of cars in storage that could come out and replace the DOT-111s,” he said.

Garneau said these market forces did have an effect on the timing of the accelerated phase-out, though he believes it would have happened regardless of crude prices.

On July 6, 2013, a runaway freight train pulling 72 crude-oil carrying DOT-111s derailed and exploded, killing 47 people and destroying downtown Lac-Megantic.

“I think Canadians have begun to realize that this is a profoundly traumatic experience for the town of Lac-Megantic and I really do want to help them to move forward and rebuild and part of that is rebuilding the confidence that municipalities need to have in the security of their railway systems,” Garneau said.

The new class of tank car, the TC-117 announced in May 2015, is described as having a thicker steel hull, thermal protection, a full head shield, protective valve covers and a bottom outlet valve for safety.

Garneau said there are about 30,000 DOT-111s without a thermal layer transporting crude oil on railways in North America.

CP and CN Rail told the Financial Post that they do not own any legacy DOT-111s and support the accelerated phase-out of these cars carrying crude oil on their tracks.

“CP is pleased that it will no longer have to move any of these cars after Nov. 1 in Canada. We would like to see the same action taken in the United States,” said CP media relations director Jeremy Berry in an email.

The U.S does not yet have a timeline for phasing out these cars and Garneau says tankers carrying crude originating from the U.S. that are not up to code will not be able to cross the border and risk unspecified fines for violations.

These cars, which have long been the workhorse of the North American fleet, will still be in operation, but will no longer be allowed to transport dangerous materials such as crude oil.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on July 26, 2016, in economic impact, miscellaneous, oil, political. Bookmark the permalink. Leave a comment.

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