Sunday, February 14, 2016

Could Quebec oil rail disaster repeat near Philly?

Are oil pipelines safer than runaway oil trains?

Could Quebec oil rail disaster repeat near Philly?

Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, Saturday, July 6, 2013. A large swath of Lac Megantic was destroyed Saturday after a train carrying crude oil derailed, sparking several explosions and forcing the evacuation of up to 1,000 people.
Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, Saturday, July 6, 2013. A large swath of Lac Megantic was destroyed Saturday after a train carrying crude oil derailed, sparking several explosions and forcing the evacuation of up to 1,000 people. AP Photo/The Canadian Press, Paul Chiasson

An UPDATED VERSION of this item, including additional comments from industry, ran in my column in the Philadelphia Inquirer here.

EARLIER: A runaway train carrying crude oil from western Canada blew up the downtown of Lac-Megantic, Quebec, near the Maine border, over the weekend, killing at least 5, wrecking dozens of buildings and leaving dozens missing and feared dead. See story in the Montreal Gazette here.

Many more trains are carrying oil East, and many more will be terminating in Philadelphia, Delaware City, Essington, and other Delaware River oil refining communities, now that high-quality oil is flowing from oil-sands and fracking fields in North Dakota and Alberta.

Rail moguls like Warren Buffett, whose Berkshire Hathaway holding company owns the Burlington Northern Santa Fe lines, are profiting richly from this rail traffic -- which is even greater than it would be because environmental groups like the National Resources Defense Council are fighting attempts to build the Keystone pipeline and other overland pipes to the oilfields.

The war between rail, pipeline and barge is as old as the oil business. Sunoco, Gulf, and other refiners located works on the Delaware, and Sunoco built hundreds of its own tankers to carry oil here by sea, to escape John D. Rockefeller's Standard Oil Co. and his allies and creatures, including the Pennsylvania Railroad, which controlled freight rates and charged Standard competitors extra (and rebated the difference to Rockefeller.)

But oil-by-rail is both more expensive and more prone to oil spills than pipelines, notes Bloomberg here. Why are pro-Earth types so anti-pipeline, if their policy serves to force more oil to move by rail, risking more oil spills? 

And will the Quebec tragedy change plans to ship more oil to the Philadelphia area by rail? "Since Saturday we have been closely following this evolving story and reviewing related information with our railroad service providers to ensure that proper procedures and guidelines are in place and being followed at our rail facilities," Michael Karlovich, spokesman for PBF, which ships western crude by train to its Delaware City refinery, told me. 

"Although there are still many unanswered questions about the incident in Canada, as more facts become available and we gain a better understanding of the cause, we will determine whether that information applies to our operations," Karlovich added. 

"Anytime you have an undertaking in the industrial sector, bad things can happen," notes Jack Galloway, whose Canopy Partners is assisting in the construction of a $68 million rail-barge terminal at Peco Energy Co.'s Eddystone coal plant site to get North Dakota oil to local refiners. (See 2012 story by my colleague Andrew Maykuth here.)

"We expect we can plan out the shortcomings, human and technical, by putting in all these fail-safe devices that have been developed," Galloway told me. "Our facility will be state-of-the-art." He says he's visited operating partner Enbridge Inc.'s North Dakota crude-oil loading site, and it's"the gold standard," he said. "We expect our offloading is going to be every bit as good."

The Federal Railroad Administration sets standards for rail oil haulers, who, at least for the Essington site, are all "Class One railroads" -- CSX and Norfolk Southern, via their Philadelphia-based Conrail joint operating affiliate -- subject to relatively strict operating limits, Galloway says. "Once the rail cars enter the facility, a derailer or a mechanical methodology will preclude that railcar from leaving the faciltiy unless (the switch) is manually thrown," he added. "There'll be people here around the clock. I don't think we're going to have a duplication of the things that went on in Canada." 

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About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at or 215 854 5194.

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