The main railway line between western and eastern Canada was closed after a Canadian Pacific Railway train carrying crude oil derailed on February 14, 2015. The incident happened in Ontario on an eastbound train with 100 cars. The train started in Alberta and derailed in a wooded area 30 miles into Ontario. 29 cars left the track and 7 caught fire. Some oil was also spilled at the site. Emergency crews were able to move 71 cars from the site fairly quickly. However, the railway line closure was in effect for more than 72 hours. Things are now up and running again.
What this incident shows is that Canadian oil producers are too dependent on the railway for shipping crude oil and pipeline capacity is not growing. Director of Oil and Gas at Frost & Sullivan in Houston, Carl Larry, said, “There might be a push for more pipeline infrastructure because the rail system that we have been relying on for a long time, the cracks are starting to show.”
One rail car typically carries about 700 barrels of oil. That oil needs to be carried to eastern Canada because that is where two-thirds of the refining capacity is located. Additionally, some fuel is transported into the U.S. along the Midwest and Gulf Coast rail lines. More than 180,000 barrels of oil are transported on the railways every day. That’s a lot of oil moving around.
It took emergency crews three days to get the railway line up and running to full capacity again. The main line is critical to the crude oil supply chain. Risk mitigation teams know that there is value in pipeline infrastructure, but there is still a lot of opposition to the idea that is going to hold pipeline projects back indefinitely.
Global Procurement & Supply Chain Professionals Read This…
…Carefully curated procurement & supply chain issues that make you look smart, sent to your inbox every week.