Over the past decade, American railroader Hunter Harrison has come out on top in two corporate bloodlettings, first to be president and chief executive officer of Canadian National Railway, then to occupy the same two posts with Canadian Pacific Railway.
It’s probably fair to say he had a few sleepless nights and a few bad dreams along the way.
But it’s doubtful he has ever had a nightmare turn into reality like the one he referred to at CP’s latest annual meeting.
Tackled by reporters about the risks of carrying crude by rail, Harrison said:
“Look, are we never going to have an accident? No. It’s not the case.
“I don’t know of any mode of transportation, whether it’s pipeline, air or rail that has not had accidents. And, God forbid, there will be an accident in the future that we have to deal with the best we can,” he said.
It took less than two months for an event that likely not even he could have imagined to take place.
The one small comfort for Harrison was that CP had only an arm’s length connection with the horror in the early hours of July 6 that wiped out the heart of a small Quebec town, destroying scores of houses and commercial buildings, killing 15 and leaving a list of about 45 people among the missing that authorities have hinted may never be found and identified.
Chain of events
The chain of events actually started with CP, which picked up a unit train of Bakken crude in North Dakota, before handing the 72 tank cars with 50,000 barrels of crude to Chicago-based short-haul operator Montreal, Maine& Atlantic.
With a single engineer at the controls, the train continued about 140 miles east of Montreal to the town of Nantes, where the operator pulled off to a siding and, says MM&A, applied the brakes, secured the train and headed for a rest in a nearby hotel.
He had barely left when a fire was noticed in the locomotive and the nearby Nantes Fire Department extinguished the blaze.
Everyone left, apparently satisfied the proper measures had been taken, but at 12.56 a.m. on July 6 the train started rolling down a continuous slope into Lac-Megantic and 18 minutes later derailed on a curve into the town center at a speed “much over” the authorized limit, according to officials with the Transportation Safety Board, or TSB, of Canada.
The slope of 1.2 percent was rated as “huge” by the officials, almost in the same category as the 1.6 percent-2 percent gradients in the Canadian Rockies.
Five of the cars caught fire and set off a series of explosions which leveled the historic town center and killed late-night partygoers in a local pub.
Lac-Megantic faces months of pain and years of trying to rebuild what has been destroyed in their community of 6,000.
Investigation could takes years
A team of 14 TSB investigators is involved in trying to determine what happened and figuring out what if anything should be done prevent a recurrence.
Chief investigator Donald Ross indicated the process could take years and any recommendations on rail safety procedures would take even longer to implement – five years by a Transport Canada estimate.
Inspector Michel Forget of the Surete du Quebec (the Quebec provincial police force) turned up the volume on July 9 by disclosing that an “unprecedented criminal investigation” is under way involving 200 officers, saying evidence has been uncovered to support the criminal probe.
He said “elements” discovered so far point to a range of possible charges, from “sabotage to criminal negligence,” but did not offer further details.
“There are pieces (of evidence) that might lead us to believe that they are artifacts from criminal acts,” Forget said. “We are not at the stage of arrests right now.”
To preserve evidence, the “red zone” of the crash site was immediately designated a “crime scene” following the accident.
Edward Burkhardt, chairman of the Montreal, Maine & Atlantic Railway, told reporters his company accepts some, but not all of the blame for the accident.
Arriving late July 10 in Montreal, 150 miles west of Lac-Megantic, he said a “combination of factors” caused the derailment, including a decision by a Nantes firefighter to shut down the train locomotive, thus disabling the air brakes.
“We are not pointing at this fireman as being some kind of evil guy or anything, but he played a role in the whole thing,” Burkhardt said.
He said that because the tanker cars were destroyed it “will be very hard to determine” whether hand brakes were set, although he said the engineer told MM&A officials he had set a number of the brakes.
Ross said he expects the TSB will renew its efforts to “advocate” for stronger rail tank cars that carry “dangerous” goods such as crude oil, gasoline, diesel and propane.
But Ross and the TSB official Ed Belkaloul told a televised briefing they have not yet been able to obtain a detailed breakdown of the cargo on the train, even though MM&A said the 72 cars were carrying 50,000 barrels of crude from the North Dakota Bakken to Irving Oil’s 300,000 barrel-per-day refinery at Saint John, New Brunswick.
Ross said the TSB, which does not assign fault in accidents, is ready to recommend changes to safety measures in the transportation of hazardous materials “as soon as we have some to communicate” and before a final report is issued.
Changes could include thicker steel
He said changes as a result of the MM&A investigation could include thicker steel or shields for the tank cars, called CTX-111A in Canada and DOT-111A in the U.S. Transport Canada said the cars make up about 69 percent of the U.S. tanker car fleet and 80 percent of the Canadian fleet.
Canada’s Transport Minister Denis Lebel told reporters that should the TSB identify “deficiencies (in the cars) we will not hesitate to take appropriate action.”
He disputed claims by critics that the government has laid off rail safety inspectors in a round of budget cutting, arguing that since 2009 more than C$100 million has been spent on rail safety measures, while tougher penalties have been introduced.
In late 2011, the federal auditor-general warned that Transport Canada had “not designed and implemented the management practices needed to effectively monitor regulatory compliance” involving the transportation of dangerous goods.
Andrew Leach, an associate professor in the School of Business at the University of Alberta, said the Quebec disaster shows that the hazards of transporting crude oil by any means are “real and need to be managed. In that sense, it’s bad for pipelines, too.”
Russ Girling, chief executive officer of TransCanada — which plans to deliver 500,000-850,000 barrels per day of western crude to Montreal and possibly Saint John under its Energy East proposal — said he expects a new set of regulations will be issued in the aftermath of Lac-Megantic.
“We don’t subscribe to theories that what is bad news for rail is good news for pipelines,” he said. “This is not good news for anybody. This is a tragic event that shakes everybody. It shakes all of us that are in this business. Those kinds of events shouldn’t occur.”
He said the onus is now on all stakeholders to adopt modern energy infrastructure. “With all of our projects (including Keystone XL and Energy East) our focus is on ensuring that we’re using the best technology, the best response capabilities that are available to us, to ensure the public that we can do these things in a safe and reliable manner.”
CP’s Harrison told reporters at his company’s annual meeting in May that CP is proceeding “cautiously” in meeting the demand to move crude by rail.
“We’re not going to spend capital to build infrastructure that will last 40 or 45 years, when we’re not sure about the markets for five or six years,” he said.
Wayne Benedict, a labor attorney and former locomotive engineer who spent 15 years working for CP and British Columbia Rail, said there has been an alarming rate of deregulation in the industry.
He said that in the late 1980s Transport Canada would show up unannounced and “they’d climb all over the trains. By the time I left the railway industry in 2003, you almost never saw regulators.”
A report by RBC Capital Markets said that if the U.S. government rejects Keystone XL, Canadian crude shipments by rail could increase another 42 percent by 2017.
The Railway Association of Canada has estimated that as many as 140,000 carloads of crude totaling about 91 million barrels will be shipped on Canadian rail tracks this year, compared with 500 carloads in 2009.
CP is targeting 70,000 carloads this year, up from 13,000 in 2012, and Canadian National Railway expects 60,000 carloads, double the 2012 count.
James Cairns, vice-president of petroleum and chemicals with CP, said nearly 300,000 new rail cars are to be delivered in 2014 to rail operators in Canada, adding to the capacity to ship greater volumes of crude out of Western Canada.
Keith Stewart, a climate and energy campaigner with Greenpeace Canada, said the tripling of crude-by-rail shipments since 2011 has been “done without any oversight and review and that’s a huge mistake.”
But he said that it is not easy to contemplate building a pipeline out of the Bakken that would “take 50 years to pay for itself” when Bakken wells are expected to produce for only 10 to 12 years, but ignoring the much longer estimates from U.S. government and oil company sources that show fields with four-to-five times that lifespan as technology improves the oil recovery rate and more wells are drilled.
—Gary Park
