Canada’s Failing Energy Strategy

On July 6, 2013, 47 residents of Lac-Megantic, Quebec died horribly when a 74-car freight train carrying crude oil exploded in a fireball. It was the deadliest freight-train accident in Canadian history. Five bodies were never recovered and were assumed to have simply vaporized. DNA samples were required to identify others. Heat from the inferno was felt over a mile away.

In spite of this tragedy, moving crude by rail (CBR) is comparatively safe. Since 2013, safety standards have been tightened throughout North America. The International Association for Energy Economics (IAEE) found the incidence of spills with CBR to be less than for pipelines. However, this is a deceptive statistic. Once you adjust for the greater volumes of crude moved by pipeline versus CBR, as well as the greater distances covered, pipelines remain substantially safer. The report concludes that, “the risk associated with shipping crude oil is noticeably larger for rail deliveries than for pipeline deliveries.”

2,500 miles west, off the coast of Vancouver, live around 75 endangered killer whales. Their connection with Lac-Megantic is not obvious. Fortunately for the Orcas, vocal advocates have successfully made their continued survival more important than avoiding another freight train tragedy. By blocking the Trans Mountain Pipeline Expansion, they have ensured that more Albertan crude oil will reach its buyers by rail, given continued inadequate pipeline capacity.

The Trans Mountain Pipeline (TMX) was put into service in 1953, and has been in continuous operation ever since. It’s another example of the long life of installed energy infrastructure, which generally appreciates in value when properly maintained even while accounting rules allow for its depreciation. Kinder Morgan (KMI), which acquired the pipeline in 2005, had been frustrated in its efforts to more than double the capacity of TMX by adding a second pipeline alongside the first. The TMX Expansion’s approval became a provincial political football. Land-locked Alberta has few choices in exporting its crude oil.