104-car train hauling oil crosses Maine

http://www.kjonline.com/news/oil-crossing-maineby-way-of-railroad_2012-05-29.html

By Tux Turkel tturkel@mainetoday.com
Staff Writer

Crude oil from the West has begun moving across Maine -- not by pipeline, as some environmental activists fear it will someday; but by railroad.

A train carrying 104 tank cars of crude from the Bakken oil fields in North Dakota came through Maine last weekend on a 2,435-mile journey to the Irving Oil refinery in Saint John, New
Brunswick. It rolled through Portland, Waterville and Bangor on Pan Am Railways tracks, on its way to Canada's largest oil refinery.

This so-called unit train -- made up only of oil tank cars -- is an example of how Irving and other energy giants are reacting to a fast-changing North American petroleum market, and how Maine figures into the developments.

"I think we're going to be seeing more of this," said Tom Hall, a former assistant general manager for Pan Am Railways in Maine.

New technologies and high global oil prices have made it economical for energy companies to develop mammoth petroleum reserves in North Dakota, as well as the Canadian province of Alberta. The challenge is getting all the oil to refineries across North America.

The easy-to-refine oil in North Dakota is locked up in shale formations and is released by injecting pressurized water and chemicals, a process called fracking. In Alberta, a similar process is used to free heavy, tar-like oil located in sand formations. Both methods are under fire, in part because they can pollute groundwater.

Growing controversies and delays in building new pipelines or reversing the flow of existing ones to move this oil, are threatening production goals and export plans. That has created an unexpected opportunity for railroads, which see a void. They're building loading facilities and adding tank cars to compete with pipelines for a piece of the evolving business.

Maine's freight railroads stand to benefit as well. They're upgrading service to handle an expected increase in traffic to Saint John.

The first big shipment was made over the weekend. Each of the 104 cars carried roughly 700 barrels of oil. The train traveled through Chicago to Rotterdam Junction, N.Y., where it moved over Pan Am Railways track through southern and eastern Maine and connected with the New Brunswick Southern Railway for the trip to Saint John.

The train was photographed as it crossed the Merrimack River in Massachusetts by Kevin Burkholder, the editor of Eastern Railroad News.

"Deemed a test train, this is the first of what could be a steady flow of the rolling crude oil pipeline to feed the Irving refinery," Burkholder wrote last weekend in his newsletter.

Pan Am has been improving its tracks and adding locomotives and crews, making it a player in the growing crude-oil competition, according to Hall.

Pan Am operates one of three possible rail routes that can get crude to Saint John. Canadian National Railroad has another, which skirts Aroostook County and stays north of Maine. A third goes through Jackman, Greenville and Brownville Junction to reach New Brunswick via the Montreal, Maine and Atlantic Railway.

"Irving's going to go with whoever does the best job at the best price," Hall said.

The prospect of steady oil shipments has led Montreal, Maine and Atlantic to announce that it will double the frequency of its service from three to six days a week between Montreal and Brownville Junction. The new schedule will begin after a strike at Canadian Pacific is resolved, according to Ed Burkhardt, MMA's board chairman.

Price is driving Irving's thirst for Bakken oil, Burkhardt said. Irving's refinery, which has a capacity of 250,000 barrels a day, primarily receives its supply via tankers from Venezuela, the Persian Gulf and the North Sea. However, overseas oil now is roughly $20 a barrel more expensive, so it's cost-effective to move some of the supply thousands of miles by rail.

"Rail can land oil at Saint John at a better price than by sea," Burkhardt said.

The most immediate factor that could limit business is the availability of tank cars, which are in great demand nationally, Burkhardt and others say. It takes roughly six days to go from North Dakota to New Brunswick, plus offloading time.

If rail delivery grows, it could help Maine's struggling freight railroads and the shippers that depend on them, according to Chop Hardenbergh, editor of Atlantic Northeast Rails & Ports. That could help improve service to Maine's paper mills and attract new shippers, he said.

"It certainly helps our railroads and our overall economy," Hardenbergh said.

Commerce aside, the trend has caught some of Maine's environmental activists by surprise. They oppose the methods used to extract this petroleum -- especially the so-called tar sands oil from Alberta -- saying they are highly polluting.

In Maine, activists suspect that the Portland Pipeline Corp. will want to reverse the flow of its system, which moves crude oil west from Portland Harbor to Montreal, to send tar-sands oil east. The company has said it has no current plans to do that.

Environmental activists oppose tar-sands oil for two main reasons. They say the more-corrosive nature of the oil poses a greater risk of pipeline ruptures, and they point to a large spill in Michigan in 2010 as evidence.

Spills appear to be less of an issue with rail transport, however. Tank cars are typically double-lined and made of hardened steel to survive a derailment.

However, staff members at the Maine Chapter of the Sierra Club and the Natural Resources Council of Maine both say fracking and tar-sand extractions are unsustainable, dirty technologies, whether the product is moved by rail or pipeline.

"We don't want to see that supported in any way," said Glen Brand, a spokesman for the Sierra Club. "We don't want to see it moved to market."

Small quantities of tar-sands oil already have rolled across Maine.

Bob Grindrod, president of Montreal, Maine & Atlantic Railway, said his line handled a small, test delivery destined for the Irving refinery a few months ago. The potential to move more depends on the cost and how hard it is for Irving to refine the thick oil, he said.

Irving Oil rarely discusses its business practices, and it didn't respond to email questions from the newspaper; but Grindrod said he's aware that the refinery is ramping up its crude offloading capacity from two cars a day to 100 cars, whether it comes from the Canadian tar sands or the Bakken field.
"They are investing rather heavily," he said.