The list of major pipeline projects awaiting approval poses no threat to railways’ burgeoning business of shipping oil, railway and energy industry representatives say.
Mike Lowenger, a vice-president of the Railway Association of Canada, said although pipelines will continue to move the bulk of North America’s energy, there will continue to be demand for rail deliveries of oil.
“I think there’s lots to go around,” he said. Railways reach suppliers and buyers not served by pipelines. At the same time, they have filled some of the gaps left by a shortage of pipelines that has led to a glut of Alberta oil and reduced prices for Canadian crude.
Enbridge Inc., TransCanada Corp., and Kinder Morgan are among the major companies seeking to build or expand major pipelines in Canada and the United States.
As they await approval, the amount of crude moved by rail has ballooned.
Speaking at a Toronto energy conference Mr. Lowenger said the two major Canadian railways, Canadian National Railway and Canadian Pacific Railway, will by next year be moving as many as 360,000 carloads of oil in North America.
Pipeline executives said even if all the projects were built, there will still be unmet demand for pipelines and crude by rail.
“All of them are needed,” said Norman Rinne, director of business development with Kinder Morgan Canada.
“We’re going to be short pipeline capacity, even when all the pipelines are built,” said Paul Miller, a vice-president of TransCanada.
The railways insist they can move oil safely, despite some recent tragedies, including the derailment and explosions last summer in Lac-Mégantic, Que. Forty-seven people died and the downtown was levelled when a train carrying highly explosive crude from the Bakken region caught fire.
Railways and governments have responded by tightening safety rules and phasing out the use of older tank cars. But the DOT-111 cars involved in Lac-Mégantic remain on the rails, and critics say not enough steps have been taken.
Mr. Lowenger said the industry is considering speed restrictions for some cargo, and that the newer cars built with better hulls and shielding will increase safety.
Shipping crude by rail is a fast-growing part of the railways’ business, even though it remains a small part of their revenues.
Canadian National Railway CEO Claude Mongeau told the Globe and Mail on Wednesday he is confident crude can be shipped safely, and that safer rail cars can handle the more volatile grades of oil that come from the Bakken.
He said the railway has been investing in accident prevention technology and risk assessment. Where feasible, the railway routes dangerous goods around heavily populated areas, he said, adding that can be impossible in much of a country that was built around the railroads.
Three of the biggest pipeline projects seeking approval include:
TransCanada Corp.’s application to build the Keystone XL pipeline in the United States, which has touched off a political battle. Environmentalists say it will harm the environment while backers say it will create jobs and reduce the country’s dependence on Mideast oil.
Kinder Morgan is seeking to expand its 1,150-kilometre Trans Mountain pipeline to carry oil to B.C. from Edmonton.
Enbridge Inc. is seeking to build its Northern Gateway pipeline to the B.C. to take Canadian petroleum products to Asia and the U.S. West Coast.