The quiet expansion of “pipeline by rail”

VANCOUVER (NEWS1130) – Pipeline uncertainty may be fueling the expansion of oil-by-rail schemes up and down the west coast.

With the BC government yet to give its blessing to Northern Gateway and First Nations and environmental groups promising stiff opposition after federal approval for the project this week, a report suggests oil sands companies might resort to rail to get their product to port.

The Sightline Institute, a transportation policy group based in Seattle, has found refineries in the Pacific Northwest have been quietly increasing capacity to handle shale oil from North Dakota and bitumen from the Alberta oil sands, both by pipeline and by rail.

“Historically, rail was never a large way of moving oil, but the proposals we are looking at now in Oregon and Washington are absolutely titanic,” says Eric de Place, Sightline’s policy director.

“If you added them all up, we’d be at a volume of around 850,000 barrels per day. That’s bigger even than what Kinder Morgan is planning to do with the Trans Mountain pipeline — that’s just oil-by-rail projects in the Pacific Northwest.”

Given the uncertainty over pipeline projects in BC, de Place believes it’s likely there will be a significant increase in tanker train traffic through the Lower Mainland, carrying crude to the entire Pacific Northwest.

“As we’ve seen in Canada, there has been huge controversy over the Northern Gateway, huge controversy over the Trans Mountain pipeline so the third option for the oil companies would be to put some of that Canadian oil on the rails and move it to port terminals and refineries in Oregon and Washington. That is sort of the back-up plan, I think, for the oil industry,” de Place tells News1130.

Under current law, US crude oil can only rarely be exported overseas. Oil from Canada, however, is not subject to the ban, so the report suggests Oregon and Washington could become a transshipment hub for oil sands oil headed to China and the rest of Asia.

But de Place says, just like in Canada, there is concern over safety and plenty of opposition to oil-by-rail south of the border.

“It comes from all the way down from tribes and local levels to the bigger environmental groups and some of the bigger business communities who are really pushing back against some of these schemes.”

In Oregon and Washington, 11 refineries and port terminals are planning, building, or already operating oil-by-rail shipments.

If all of the projects are built and operated at full capacity, de Place says they would put more than 12 loaded mile-long trains on the region’s railway system every day.