Shale Daily / NGI All News Access

Train Loaded with Crude Oil Explodes in Quebec

A 73-car train crashed and exploded Saturday in Lac-Megantic, Quebec, igniting its cargo of crude oil -- possibly from North Dakota -- killing as many as 40 people and forcing the evacuation of nearly 2,000 others.

On Monday authorities in the Eastern Canada town, about 130 miles east of Montreal, told reporters that five bodies had been recovered and dozens of other people were missing. Fires resulting from the crash were "largely extinguished" by Sunday, according to the Montreal, Maine & Atlantic Railway (MMA).

"Provincial and federal authorities have taken control of the derailment area, and MMA personnel have not been able to enter to continue their investigation concerning cause and to plan recovery operations," MMA said.

The Transportation Safety Board of Canada said it has opened an investigation into the rail accident.

Preliminary indications were that the locomotive of the train was shut down while it was parked in a station a few miles from Lac-Megantic. The incident may have resulted in the release of air brakes on a second locomotive that was holding the train in place, according to MMA.

The train was bound for Irving Oil Ltd.'s refinery in Saint John, NB, that company said.

Firefighters from Maine who crossed the border in response to the derailment and fires were back in the United States by Monday, according to Maine's Emergency Management Agency. The state's Department of Environmental Protection (DEP) has found no changes to Maine's air quality as a result of the fire and a related oil spill in the Chaudiere River, which flows into the St. Lawrence River, has not affected Maine waters, according to DEP.

Quebec Environment Minister Yves-François Blanchet told Canada's CBC that a an estimated 100,000 liters (26,400 gallons) of oil had been spilled into the river, resulting in "a small, very fine, very thin layer of oil" covering about 100 kilometers (62 miles) of the river from Lac-Megantic to St-Georges-de-Beauce, PQ.

"What the Lac-Megantic catastrophe highlights is that this country's energy policy is off the rails," according to Calgary-based Arc Financial Corp. Canada, according to Arc analysts, has the stature of a country rich in energy resources, but suffers from "a sad lack of cohesive, proactive thinking" about how to produce, consume and trade those resources.

"We don't know whose oil was on the train at Lac-Megantic, but it's not likely to be of Western Canadian origin," the analysts said in a note Monday.

Producers in North Dakota's Bakken Shale are becoming ever more dependent on rail transportation to move oil to market. Rail transportation shot up to account for 75% of shipments in April, according to the state's Department of Mineral Resources (see Shale Daily, June 18).

If left unaddressed, pipeline shortfalls will put Canada's oil industry at risk and will have "substantial negative impact" on the country's economy, according to a report issued earlier this year by the Canada West Foundation (CWF) (see Shale Daily, Feb. 14).

On the U.S. side of the border, the railroad transportation of Bakken oil supplies continues to grow, and transporters are investing in new facilities on a pace with pipeline takeaway growth, according to the North Dakota Department of Mineral Resources and the state pipeline authority (see Shale Daily, Nov. 2, 2012). But, while rail can fill some of the transportation gap until more pipeline capacity comes online, only major pipeline projects can economically move enough western Canadian oil, according to the CWF report.

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