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Best Practices, Economics, Energy Policy, Fracking, Mining, Regulation

Mégantic, Fracking & Money

Fracking has altered western North America’s economic landscape, making rail shipments to East Coast refineries feasible – and increasing the likelihood of accidents.
BY David Fernandez , Ray Tomalty on

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EARLY SPECULATION on what caused the train disaster in Lac-Mégantic, Québec, in July seems to have settled on the role of the train’s engineer and the railway company’s poor safety record – and penchant for cutting corners. Some attention was also paid to the out-dated technology used for dangerous cargo, deregulated railroads and Transport Canada’s increasing reliance on rail companies to patrol and enforce their own safety rules. 

EARLY SPECULATION on what caused the train disaster in Lac-Mégantic, Québec, in July seems to have settled on the role of the train’s engineer and the railway company’s poor safety record – and penchant for cutting corners. Some attention was also paid to the out-dated technology used for dangerous cargo, deregulated railroads and Transport Canada’s increasing reliance on rail companies to patrol and enforce their own safety rules. 

But one glaring question about what went wrong in that sleepy Québec mining community received little attention: Why were 72 tanker cars full of crude oil from a small prairie town 3,000 kilometres away bound for a refinery in Saint John, NB? The answer is not a training-related, regulatory or technical one. It’s a reflection of the new economics of North American oil, which – despite their abstract nature – can contribute to disaster just as any engineer’s failure to engage a handbrake. 

The train was carrying crude oil from the Bakken shale “play,” an ancient rock formation covering parts of North Dakota, Montana, Saskatchewan and Manitoba. Discovered in the 1950s (and named for the farmer upon whose land the first well was drilled), the deposit saw limited activity because the oil was not easily recoverable. But in 2008, new rock-fracturing (fracking) technology became available, triggering a production boom. By the end of 2010, the flow of black gold had reached 458,000 barrels per day, outstripping the capacity of local pipelines.

The resulting glut of oil drove down prices relative to overseas sources, with spreads as high as $48 per barrel. This made it financially feasible to cart the crude by railway to East Coast refiners, which usually rely on the North Sea, Africa or the Middle East. Between 2010 and 2012, the amount of railway traffic transporting crude increased 40 per cent in the US and nearly 21 per cent in Canada. With that growth has come a number of high-profile accidents. Canadian Pacific, whose network runs through the Bakken field, suffered the industry’s first serious spill in March 2013, when 14 tanker cars derailed near Parkers Prairie, Minnesota, leaking more than 56,000 litres. 

Before the shale fracking boom, Montreal, Maine & Atlantic Railway, which owns the route segment through Lac-Mégantic, carried mostly paper and forest products. In 2010 it didn’t carry any crude, but by 2013 it was moving 16,500 barrels per day. The company’s policy of using one-person crews for even the longest trains might have been suitable for paper materials, but was tragically inappropriate for trains carrying explosive petroleum. 

So to all the controversial aspects of our rapidly expanding fracking industry, from ground water, surface water and air contamination, to seismic disruption and increased fossil fuel dependence, we can now add deep and legitimate concerns about the risks of moving the oil it produces to distant markets.

Ray Tomalty is principal of Smart Cities Research, a Montréal consulting firm that specializes in issues related to urban sustainability. He is also an adjunct professor at the School of Urban Planning at McGill University, an A\J editorial board member and a regular contributor to the magazine.