Canada bans crude railcars earlier than planned

The older US DOT-111 tank cars, tied to a deadly Quebec derailment in July 2013, will be barred after 1 November. (Canadian Press/REX/Shutterstock)

TORONTO (ICIS)–Canada is pulling older tank railcars from crude oil shipment service effective 1 November – six months ahead of the original schedule, officials confirmed on Tuesday.

US DOT-111 tank railcars (CTC-111A in Canada) were involved in a fatal 2013 derailment of a train carrying crude. The train exploded in the centre of Lac-Megantic, Quebec, killing 47 people.

Industry trade group Railway Association of Canada (RAC) said that removing the railcars from service sooner was “an effective step” in improving the safety of the shipment of dangerous goods.

RAC added that under the federal transport ministry’s “protective direction” from Monday, legacy DOT-111 tank railcars – that is, those built prior to a new standard known as CPC-1232 – must now be retired from crude oil service by 1 November 2016 if they are not retrofitted by that time.

Rail customers and leasing companies own the vast majority of tank railcars, and they are responsible for updating and retrofitting their tank car fleets, the group added.

Analysts said that the Canadian decision to accelerate the phase-out was not likely to squeeze railcar shipments, given that demand for crude railcar shipments has declined significantly amid relative weak global crude oil demand.

According to the latest data by the American Association of Railroads (AAR), Canadian railcar shipments of crude oil and refined oil products were down 16.4% year on year, to 174,650 loadings, for the first 28 weeks of 2016, ended 16 July. In the US, they were down 21.4% year on year, to 316,403, over the same period.

However, despite the current weakness in oil and risks such as the Lac-Megantic catastrophe, crude-by-rail remains an important option for Canada’s oil industry, given the difficulties of getting approvals for new pipelines.

Three big planned pipelines from Canada’s oil-rich Alberta province – Energy East, Northern Gateway, and a big expansion of the Trans Mountain pipeline – have all stalled amid objections from environmental and other groups.

Last year, the US officially rejected another project, Keystone XL from Alberta to markets in the US, also because of environmental concerns.

The July 2013 derailment killed 47 people in Lac-Megantic, Quebec. (Canadian Press/REX/Shutterstock)