Railroads, Refineries See Profit in Shipping Crude Oil Across Maine

(SOURCE: Kevin Miller - Maine Sun Journal)

BANGOR — The modern-day oil boom in the western U.S. and Canada is fueling interest in shipping crude oil by rail across Maine to a refinery in the Maritimes.

But the prospect of long trains of oil-filled tanker cars rumbling through Maine also has state environmental officials concerned, particularly in the wake of a recent derailment that sent several tanker cars of nonhazardous materials tumbling into the Penobscot River. As a result, state officials are reviewing their spill response strategies and making other preparations.

“It definitely got my attention with 104 rail cars of crude coming through the state,” Barbara Parker, head of the Maine Department of Environmental Protection’s hazardous materials response team, said in reference to a recent oil shipment.

Pan Am Railways and Montreal, Maine and Atlantic Railways are both exploring the feasibility of moving vast amounts of crude to an Irving Oil refinery in St. John, New Brunswick. Pan Am’s rail network was used to successfully deliver the first shipment of 100-plus tanker cars in late May, and MMA reportedly plans to follow suit soon.

The shipments are viewed as a potential financial windfall for railroads battling to maintain shipping volume. And for Irving, it is a chance for the New Brunswick-based refinery to tap into the massive amounts of oil flowing from wells in North Dakota and the controversial tar sands of Alberta, Canada.

Cynthia Scarano, executive vice president at Pan Am, said changes in the energy market have sharply decreased the tonnage of coal carried by the railway elsewhere on its network. So in order to achieve the shipping volume needed to remain profitable and maintain its work force, Pan Am is shifting its gaze from coal to oil.

“Pan Am is currently trying to expand its shipping base and there are a lot of new products that we are looking at, crude [oil] being one of them,” Scarano said. The expansions could allow Pan Am to add several additional 15-person crews, she said.

Irving officials did not return calls seeking comment, and an MMA representative declined to discuss the potential crude shipments.

Trains hauling potential pollutants and hazardous materials regularly rumble across Maine, unbeknownst to or unnoticed by many people and nearly always without incident. And federal interstate commerce laws protect those shipments from possible disruption whether by individuals, organizations or local governments opposed to the materials.

“That’s why it is interstate commerce,” said Nathan Moulton, director of the Maine Department of Transportation’s rail division. “If it wasn’t, you would have a town that would stop [the shipment] and you’d never be able to get anything from A to Z.”

Because it is a natural product, crude oil, or oil that has not yet been refined, is not technically considered a hazardous material. But due to its hazardous components and potential to cause long-lasting environmental damage when spilled, crude and other oils are strictly regulated and require specially trained response teams. And crude oil spills must be reported to the state.

Rail industry groups point out that shipping dangerous and hazardous materials by rail is the safest route — with 99.997 percent of hazmat delivered in 2009 without a release caused by a train accident, according to the Association of American Railroads.

Rail accidents involving hazardous materials are down by 90 percent since 1980, the association said.

For that reason, rail is often the only allowable means of transportation under federal law for some of the most dangerous materials, such as chlorine and other chemicals that can be deadly when vaporized. As so-called “common carriers,” larger railroads also are prohibited from refusing to carry hazardous materials.

But as last month’s Pan Am derailment in Bucksport shows, train accidents do happen. And while the vast majority of accidents cause little more than a disruption to rail traffic, state environmental officials are taking an interest in what the shipments of large amounts of unrefined oil could mean to Maine.

“The transportation of crude oil across rail lines is a concern because many times, rail lines are very close to sensitive water bodies,” said Scott Whittier, director of the Maine Department of Environmental Protection’s oil and hazardous waste facilities division. “So it does present a potential threat that we need to prepare for.”

Those preparations include ensuring both DEP staff and other agencies are trained to respond to large oil spills along rail lines. DEP staffers are already trained to handle spills from the sea-going tankers and pipelines that feed or leave Portland, the second-largest oil import terminal on the East Coast. The department also is reviewing the solvency of a state oil spill response fund paid for with a fee charged on every barrel of any type of oil imported into Maine.

Parker, who is director of the DEP’s division of response services, said department staff regularly handle oil spills due to Maine’s reliance on heating oil. DEP staff also spent several weeks on the Gulf Coast helping with the response to the BP Deepwater Horizon spill.

But the so-called “tar sands oil” from Alberta is much heavier and grittier than conventional crude.

“So we have been looking at that,” Parker said. “It would be a different type of response than the lighter crude coming out of North Dakota.”

The Federal Railroad Administration’s online database of railway safety information does not contain specific data for accidents involving oil spills but does show accidents involving hazardous materials. And those statistics show that the nation’s railroads transport hazardous materials with relatively few incidents.

Nationwide in 2011, 664 hazmat cars derailed or were damaged and just 66 of those cars released materials, according to federal rail safety reports. That is on a network of railroads that logged nearly 730 million miles that year.

Since 2002, Pan Am has reported two hazmat releases from cars operating throughout their territory while MMA has reported three.

The May 29 train derailment that sent several Pan Am tanker cars over an embankment in Bucksport and into the Penobscot River was not a major incident by environmental standards, although it was a logistical challenge to clean up.

It is now believed that less than 1,000 gallons of a nonhazardous, synthetic latex chemical as well as some clay slurry leaked into the Penobscot River, home to the only sizable spawning run of Atlantic salmon left in the United States and other endangered species.

But had the three diesel-powered locomotives riding immediately in front of the derailed cars gone into the river — or had the tankers been carrying less benign chemicals, as many trains in Maine do — the situation could have been far worse. The locomotives, for instance, can each carry thousands of gallons of diesel.

“We are extremely fortunate that this was not a hazardous material or an oil spill,” Samantha DePoy-Warren, a DEP spokeswoman, said several days after the incident.

Derailments are, unfortunately, simply a part of business for railroads — always have been and always will be, absent major technological changes. Trains “jump tracks” for myriad reasons.

Metal rails crack, split or buckle. Heavy rains or floods wash out the underlying gravel or cause the wooden ties to shift. Couplers linking cars together fail or are improperly adjusted. And a conductor who drives the locomotive too fast, brakes too abruptly or causes the train to lurch can easily trigger a derailment.

There were six derailments in Maine last year and five in 2010 that were serious enough to require reporting to the Federal Railroad Administration, the division of the U.S. Department of Transportation that oversees rail safety and enforcement. But figures fluctuate from year to year, ranging from 11 derailments reported in 2006 to just four two years later.

The majority of derailments in Maine happen on lines operated by Pan Am and Montreal, Maine and Atlantic, respectively the largest and second-largest rail shippers in the state. The vast majority of derailments were relatively minor incidents without spills or injuries, but others were more problematic.

In April 2006, for instance, three Pan Am cars loaded down with paper jumped the rails in Bangor and tipped into the Penobscot. The contents of some of the cars later caught fire when crews attempted to cut open and empty them. As a result, enormous piles of soggy paper that came to be known locally as “spitball mountain” sat on the banks of the Penobscot for months and resulted in paper waste drifting downstream.

The Federal Railroad Administration collects reams of safety and accident-related data. Comparing companies’ safety records is difficult, however, because of the diversity in the industry.

For example, two railroads may each report hauling freight over 1 million miles in a year. But the federal data would not differentiate between the complexity of the company’s operations that would affect the likelihood of an incident, such as one company hauling 5-car trains and the other hauling trains with 100 cars.

In 2011, Montreal, Maine and Atlantic had a train accident rate of 10 accidents per million train miles throughout the company’s network, compared with a rate of 3.7 at Pan Am and a national average of 2.8 accidents per million train miles.

Over the past decade, Montreal, Maine and Atlantic has consistently had higher accident rates than Pan Am. But MMA president Robert Grindrod said the way the federal agency calculates accident rates — by per million train miles — inflates his company’s numbers because their trains only traveled 200,000 miles last year. So if MMA only had one reportable accident it would show up as five under the per-million-miles measurement, he said.

Instead, Grindrod pointed to the fact that MMA has not had any reportable accidents on its main line during the past three years. Both of MMA’s derailments last year happened in rail yards.

“It isn’t a problem,” Grindrod said of hauling potentially hazardous substances. “We follow very rigorous safety procedures regarding our track, regarding our trains and regarding the materials within our trains.”

Representatives at both the Federal Railroad Administration and the Maine Department of Transportation — which oversees rail to a much lesser extent than the federal government — declined to comment on individual companies’ safety records.

Rob Kulat, spokesman for the Federal Railroad Administration in Washington, D.C., said his agency only enforces the laws and does not speculate on companies’ safety records.

Although the federal agency does conduct its own track inspections, the vast majority of that responsibility is left to the railroads themselves.

“The primary duty of FRA’s 90 federal track safety inspectors, along with 30 certified state inspectors, is to strategically monitor track conditions to determine whether a railroad is complying with federal safety standards,” states a fact sheet from the agency.

Federal rules require most mainline tracks to be inspected weekly and sometimes two or three times a week if the track is rated to carry passengers or freight at higher speeds. But railroads also can change their class or speed rating without receiving approval from or even notifying the Federal Railroad Administration.

Kulat said track inspection reports from individual railroads are available to the public but must be requested under the Freedom of Information Act, a process that typically takes several weeks.

Inspections are most commonly performed by railroad company crews that ride the rails in specially designed pickup trucks. Federal regulators, in addition to doing their own periodic inspections, use the company reports to perform inspection audits.

Scarano, the executive vice president at Pan Am, said that in addition to the weekly inspections by crews on trucks, her company checks each stretch of track at least twice a year using a machine that essentially x-rays the rails for structural defects.

“At Pan Am, safety is our No. 1 priority,” Scarano said.

Nevertheless, accidents still happen.

Track conditions have been the primary cause of 13 of Pan Am’s 20 federally reported derailments since 2006, according to data contained on the Federal Rail Administration safety website. The most frequent track problems involved broken rails, misaligned tracks or switch problems, according to federal documents.

Track conditions were the primary cause of 10 of Montreal, Maine and Atlantic’s 19 derailments during that time.

Railroads also are required to submit detailed reports to the Maine Department of Environmental Protection on spills or other incidents that occur anywhere on the company’s property, whether on the tracks or in the railyard.

Pan Am Railways is subjected to additional reporting scrutiny following an August 2007 incident at the company’s Rigby Yard in South Portland that also garnered the company a $475,000 fine.

According to the DEP, a substantial amount of oil emanating from the rail yard operated by Portland Terminal Company — a Pan Am subsidiary — contaminated the city’s stormwater system and Calvary Pond. The spills, which were believed to have taken place over time, presented a threat to groundwater and other local water bodies, the department stated.

A subsequent consent agreement negotiated between the DEP and Pan Am required the railroad to put down absorbent “track mats” in areas where locomotives were parked, idled, fueled or serviced. The agreement also put additional pressure on Pan Am to immediately report — and begin to clean — any spilled oil.

Since then, Pan Am has reported roughly 300 spills of lube oil, hydraulic oil or other types of oil to the DEP, the overwhelming majority of which involve quantities of one gallon or less, and sometimes as little as one one-hundredth of a gallon. In 2010, however, a ruptured fuel tank on a derailed locomotive leaked 2,800 gallons of diesel in the railroad’s Waterville railyard.

Pan Am’s Scarano pointed out that most of what is reported are equipment leaks or spills rather than tanker spills. She declined to comment specifically on any changes in company practices since the Rigby Yard case or on a 2006 diesel spill at a Massachusetts railyard that resulted in a judge levying a $500,000 criminal fine against the company.

“We work closely with the agencies,” Scarano said. “We notify them … and we take it very seriously.”

Looking ahead to the possibility of additional crude coming through Maine by rail, DEP staff said the shipments could be a positive development, benefiting the railroads as well as other industries.

“But we definitely need to be prepared,” said Parker with the DEP’s hazmat team.