Canada: The federal government has announced a C$27m contribution to the C$93m Asia-Pacific Gateway & Corridor Initiative which includes the construction of a CPR intermodal terminal near Regina, Saskatchewan.
Canadian Pacific Seeks Growth From Alberta Oil Sands
By Hugo Miller
May 2 (Bloomberg) -- Canadian Pacific Railway Ltd. is counting on a new line that will link refineries near Alberta's oil-rich tar sands to its main southbound routes to boost annual shipments by as many as 200,000 carloads.
The 16-mile track will carry oil by-products such as sulphur and petroleum coke, Chief Executive Officer Fred Green said in an April 30 interview. The added carloads would mean as much as a 7.4 percent increase from the Calgary-based company's 2.7 million shipments last year.
The area south of the tar sands ``is emerging as the next large industrial complex in North America'' for petrochemicals, Green said. Canadian Pacific is seeking government approval and plans to start construction next year and operations in 2011. The line may cost C$100 million ($98 million), Green has said.
Canadian Pacific, the country's second-biggest railroad, wants to benefit from crude-oil prices that climbed to a record $119.93 a barrel on April 28. The rising prices spurred refining companies such as BP Plc and Total SA to expand in the region along the road to the tar sands, which hold the world's second- largest proven oil reserves.
``They're very well-positioned to take advantage of the oil sands, not only taking the natural resources out but bringing in the infrastructure needed,'' said Lee Klaskow, an analyst at Longbow Research in New York.
Generating 100,000 to 200,000 carloads a year on the new line is ``very doable,'' said Klaskow, who rates Canadian Pacific shares ``neutral.''
Canadian Pacific is relying on cargo such as sulphur, coal, grain and fertilizers to increase revenue as a slowing U.S. economy damps demand for shipments of autos, lumber and construction materials.
Green, 52, has led the company since May 2006. Canadian Pacific's profit last year climbed 19 percent to C$946.2 million, as sales increased 2.7 percent to C$4.71 billion.
The company's first-quarter sales rose 2.7 percent to C$1.15 billion as revenue from grain, coal, sulphur and fertilizers each increased as much as 7 percent. Profit fell 29 percent to C$91 million because of rising fuel prices and winter storms.
Canadian Pacific gained C$2.99 to C$74.18 at 4:10 p.m. in Toronto Stock Exchange trading. The shares are up 16 percent this year, compared with a 19 percent increase for Canadian National Railway Co., the nation's biggest railroad.
Canadian Pacific may also expand its coal shipments through the pending $1.48 billion acquisition of Dakota, Minnesota & Eastern Railroad Corp. Canadian Pacific expects final approval of the purchase, announced in September 2007, from the U.S. Surface Transportation Board this September, Green said.
The U.S. railroad, based in Sioux Falls, South Dakota, had planned to spend $6 billion for as much as 262 miles of new track to haul coal from the Powder River Basin in Wyoming, which produces as much as 400 million tons of the fuel annually.
That plan will depend on customer demand, Green said.
Coal will remain a sought-after energy source for decades even as electric utilities seek cleaner alternatives, he said.
``It's a business that's big and is only going to get bigger for the foreseeable future,'' Green said.
Saturday » May 24 » 2008
All aboard for this electrifying idea
Railways chugged 2.1 billion litres of diesel fuel in Canada last year
Thursday, May 22, 2008
Electricity provides a clean, reliable power source for rail transportation in much of the world, but not in North America.
Here, diesel fuel is preferred because of the high cost of electrifying lines over long distances and the generally lower cost of petroleum here than in Europe.
Last year in Canada, 2.1 billion litres of diesel were consumed by Canadian National Railway, Canadian Pacific Railway and smaller freight railways, producing 6.5 million tonnes of greenhouse gases.
If it were possible to electrify all main and branch lines, and if all industrial switching was done with battery-electric hybrid locomotives, it could lead to the elimination of billions of litres of diesel fuel consumption and a remarkable reduction of greenhouse gas emissions.
The CN and CP main lines coast to coast, along with branches to Detroit and Sarnia, carry about 80 per cent of the revenue tonnage and correspondingly consume 80 per cent of the fuel. On this basis, a realizable reduction in CO2 equivalent of 5.2 million tonnes could be achieved by electrifying 24,800 kms of freight mainline track. But that's not all.
There are additional environmental advantages, including elimination of emissions of Criteria Air Contaminants (NOx, CO, HC, PM, SOx) harmful to human health and the ecology; reduction of as much as 30 decibels of locomotive noise at the property line; elimination of idling noise; elimination of the risk of lubricating oil or fuel spills; and elimination of the cooling fan noise from dynamic braking.
There would also be impressive cost savings. At 2008 rates, electricity costs just 15 per cent of what diesel costs for a typical electrified section of railway as outlined in many previous studies. Additionally, industrial electricity rates have risen over the last 20 years between 10 per cent and 20 per cent depending on the consumption amounts, while diesel fuel has increased 270 per cent in the same period and is still rising even more.
The technology already exists to electrify Canada's railways even given the country's harsh climate.
The electrification of the 130-km BC Rail Tumbler Ridge Branch Line in 1984 was the culmination of research, studies and testing carried out by CP Rail, the Canadian Institute of Guided Ground Transport and Transport Canada's Transportation Development Centre.
The objective of this electrification research, started 12 years earlier, was to determine the best and lowest initial cost system and to test actual European electric locomotive performance in Canadian winter conditions.
The researchers also wanted to forecast the freight train weight and speed that electric locomotives could handle reliably in Canadian conditions. Included in the research were studies of electrified train systems operating in Sweden north of the Arctic Circle for more than 90 years.
BC Rail's electrified line is the product of 12 years of worldwide searching, learning, testing, prototype installation and then 20 years experience of operating state-of-the-art electrification designed for the harsh Canadian environment.
Currently, the main impediment to railway electrification is the amount of capital needed to make it happen, even with the positive return on the investment, which is probably higher now than ever before.
The model suggested above of 24,800 kms of electrified single track would require an investment in the order of $7.5 billion.
An innovative method of financing, such as a PPP (Public Private Partnership) or a system of outside guarantees for the infrastructure assets, should be considered because the investment is beyond a reasonable size to add to the balance sheets of the railways, even though the payback would be achieved in less than 10 years.
The railways would save more than $1.4 billion annually in energy costs.
With the growth of electric power generation from wind turbines in Alberta, Saskatchewan, Quebec and Nova Scotia, and the abundant hydro power available in Quebec, non-fossil fuel electricity generation is now available in every province in Canada.
Wind energy can be purchased through the provincial electrical grid for delivery to almost any load within that grid. Thus, additional loads such as railway electrification do not imply substitution of one form of fossil fuel, diesel, to another one such as coal or residual fuel oil to generate the electric power.
Railway electrification is an environmental bargain that offers long term security of affordable transportation for our Canadian industry, agriculture and natural resources.
- Glen Fisher, president of CPCS Technologies Corp., is a former Canadian Pacific executive and an expert in railway line capacity and electrification. This is an edited version of a paper he presented to the Transport Canada EcoFreight Conference in Toronto.
This bloke has really got his wires crossed about what goes on in Australia-
Abolish the Canadian rail monopoly
Posted: June 23, 2008, 9:30 PM by Chris Boutet
Canada should adopt the Australian system of ‘running rights’ for non-incumbent rail services
By Francois Tougas
Canadian National and Canadian Pacific operate monopolies on significant parts of their railway networks. They enjoy almost unlimited power over rates and service in uncontested or “captive” markets and at present there are no market-based solutions to counteract that power. Why should Canadians care? Because unfettered railway monopoly power is undermining the competitiveness of a number of important Canadian industries, including suppliers of steelmaking and thermal coal, base metal concentrate and industrial minerals, lumber and pulp.
The best way to regulate a natural monopoly is to introduce competition by allowing others (a “guest” railway, in this case) to access the track infrastructure of the incumbent (the “host” railway) to vie for the business. Modern economies already do this with other network industries like telecom, cable and electricity and gas distribution.
This solution is commonly called “running rights” and it is not a new idea. The Australians have forged ahead with running rights, realizing efficiencies on various state rail systems. Railways throughout Canada and the U.S. grant each other these rights regularly, by agreement. In Canada, the statutory ability to compel those rights has been in force for over a century.
The economic case justifies it. Not every Canadian shipper needs running rights, as some already have truck or marine alternatives for the shipment of their products. For others who are captive to a single railway, limited running rights — subject to certain tests to ensure that the guest railway can demonstrate its fitness to operate a railway — may be appropriate. Of course, the guest railway would have to pay the host railway for track access and there may be debates over the appropriate level of that compensation.
For years, Canada addressed the railway monopoly problem by regulating railways’ rate-making ability and compelling them to provide service to the far reaches of Canada. High government subsidies were needed to make this possible. In 1988, regulatory reforms gave both railways control over pricing, among other things, while rail users (shippers) were granted three new remedies, to the extent they could use them.
For various reasons, none of these remedies intended to overcome railway pricing power. Competitive line rates, interswitching and final offer arbitration — have proved useful or even available to most captive shippers.
Further reforms in 1996 continued the railways’ steady ascent toward financial success. Today, they are earning well in excess of their cost of capital. However, that success has come by extracting high rates from resource industries and even some grain growers — and often service has been inadequate.
Resource shippers are the most captive. Typically, their mines and mills are located in isolated areas on CP’s or CN’s rail lines. In these circumstances, a railway enjoys tremendous market power: Its ability to charge supra-competitive rates and to provide inadequate service is unfettered by market discipline because there is no other railway contesting those markets. Barriers to entry are tremendously high.
The result is an inefficient and inequitable transfer of wealth from producers/shippers to carriers. Railways are able to conduct themselves free of the hallmarks of competition: low rates, rates coupled closely to costs, innovation and good service. Instead of worrying about the markets they serve, the railways focus on their customers’ markets: If commodity prices go up, the railways expect and even project rate increases. When commodity prices are down, as many have been for most of the past several decades, the railways set themselves a floor of profitability.
To a large extent, Canada’s rail carriers decide which major industries will participate in what downstream markets and whether these major industries survive or excel. In a way, they manage the businesses of their customers.
Those who say that railways are charging “what the market will bear” ignore the fact that there is no market. What is needed is effective competition to create a market. Limited running rights will permit resource industries to do what all companies seek to do — namely, call for tenders from more than one supplier (in this case, for the transportation of their products).
All Canadian enterprises expect suppliers to compete to get their business; in the case of essential facilities like rail, it is critical. Easing access to railway infrastructure through limited running rights will improve Canada’s international competitiveness and allow resource industries to take advantage of global value chains.
Despite increased fuel costs and a weakening economy, CN and CP are financially healthy. They are very viable enterprises, paying their capital expenditures and raising capital without difficulty. They are also incumbents on their own systems, in the same way the original telecom carriers are on theirs. New entrants have an inherent disadvantage. CN and CP should be able to compete against new entrants, and provide lower rates and better service to keep their customers.
It is simply in Canada’s best interests for our resource industries to realize the benefits of competition generally. Equity dictates that rail carriers should not be preferred over those who are captive to rail.
Francois Tougas is a partner with Lang Michener LLP and an adjunct professor in competition policy at the University of British Columbia Faculty of Law.
Canada: Agricultural products firm Viterra has acquired a 1 400 hp National Railway Equipment Co NViroMotive genset locomotive for shunting at its Pacific grain terminal in Vancouver.
Earlier this week, the Canadian government announced plans to provide up to $55 million to help fund the construction of a deep-water, multi-user dock at the Port of Sept-Îles, Quebec.
Slated for completion by March 2014, the $220 million project includes a new deep-water dock equipped with two ship loaders and two conveyor lines. The dock is designed to comply with new loading standards in the iron-ore industry.
“The new multi-user dock will have multiple important effects, as it will ensure the start-up of major new iron ore mines in Quebec and Labrador, the expected impacts of which will be key, with nearly 3,000 new jobs and more than $10 billion in investments," said Pierre Gagnon, the port’s president and chief executive officer, and Carol Soucy, the port’s chairman, in a joint statement.
The Sept-Îles facility is a key North American mineral port and remains on track to regain second place among Canadian ports for annual volume, port officials said. The port is directly or indirectly served by CN and the Quebec North Shore and Labrador Railway.
FEB 14 - Posted to wrong thread-
Yesterday, the Canadian government announced it will provide $15 million for the Ridley Island Road, Rail and Utility Corridor (RRUC) project at the Port of Prince Rupert, British Columbia.
The $90 million project also is being funded by CN, the Prince Rupert Port Authority and provincial government via a public-private partnership. The RRUC project calls for providing rail and road access to 1,000 acres of multi-user heavy industrial land that’s accessible through the port’s terminals. The public-private partners plan to create a common-user rail corridor, roads and access to port property.
“Building capacity at the Port of Prince Rupert is necessary for the expansion of Canada's trade with fast-growing Asian economies,” said Don Krusel, the port authority’s president and chief executive officer, in a prepared statement. “This investment unlocks the sustainable development of port infrastructure and industrial waterfront that will benefit industries across Canada.”
The Canadian government also announced the completion of the Brooksbank Avenue underpass project at the North Shore Trade Area (NSTA) at Port Metro Vancouver. The government covered half the project’s $22 million cost.
The project called for modifying the existing underpass to accommodate several additional tracks necessary for the port's planned terminal expansion. The improved underpass will enhance rail and port operations, accommodate anticipated rail and road traffic growth, and reduce road congestion and noise, federal government officials said.
The completion of the Brooksbank project is a “strong example” of partners working together for the benefit of the global supply chain, said Jane O'Hagan, Canadian Pacific’s chief marketing officer and executive vice president.
“This strategic investment allows CP to further its joint growth plans with various customers benefiting from this project,” she said.
In addition to the underpass, planned NSTA projects include the Philip Avenue and Neptune/Cargill grade separations, and Low-Level Road realignment.
Canadian railways increase car loadings 09. March 2012
Canadian railways carried 25.8 million t of freight in December 2011, up 11.5% from December 2010. The gain was the result of increases in both domestic and international cargo loadings, reported Statistics Canada. Over the same twelve-month period, the railway industry's core domestic transportation systems, non-intermodal and intermodal, saw their combined freight loadings rise by 11.3% to 23.1 million t. (ben)
Technical meetings are taking place this week in Iqaluit on Baffinland's Mary River iron ore project.
On Tuesday, Baffinland and the Qikiqtani Inuit Association identified some common ground regarding the proposed railway to ship iron ore to a port at Steensby Inlet.
Technical meetings are taking place this week in Iqaluit on Baffinland's Mary River iron ore project. (CBC)
The 149-kilometre railway would allow iron ore to be transported to a port at Steensby Inlet from the proposed Mary River mine, located about 160 kilometres south of Pond Inlet. The railway will take three years to build.
Solomon Awa with the Qikiqtani Inuit Association said the organization wants to ensure caribou will be protected and that Inuit are involved in the development of the railway.
"QIA requests that Inuit would be involved, particularly in the field where exactly the locations are at the caribou crossings so we can put those in place for the railway alignment," he said.
Awa said the seven surrounding communities want to be included in the design of the railway crossings and the decisions on where they're put.
"We can confirm that there will be involvement with the QIA and Inuit in the design of the crossings," said Oliver Curran, director of sustainability with Baffinland.
The company has twice scaled back its plans for work on the site this year. Baffinland submitted its final environmental impact statement on the Mary River mine to the Nunavut Impact Review Board in February.
The technical meetings continue.
The crude oil flows thick and black, pouring like hot coffee sludge into a rail tanker on the Saskatchewan prairie.
The tracks it sits on bisect a snow-covered tableau of wheat fields and grain elevators and oil wells. The rails stretch past the horizon, winding their way to distant refineries in Texas and California and Pennsylvania, a network of oil-bearing steel ribbon that, in a sudden shift for Canada’s energy industry, has become an important new avenue for exporting oil.
MORE RELATED TO THIS STORY
92.83 0.26 0.28%
As of May 21, 2012 8:20
The tanker sits at a loading terminal near Lashburn, Sask., that has sprung up almost overnight to serve the new demand. A string of trucks pulls up beside a small forest of black tanks next to the tracks. Each one wrangles a hose into place, empties, then leaves. Workers pump the oil from the tanks into railcars, one at a time. When they’re busy, they load 15,000 barrels per day, destined for markets across the U.S.
At a time when the pipeline industry is facing opposition to new projects, rail is surging. In the span of months, executives who had never considered moving oil by train are not just tinkering with rail shipments, but embracing them. While these shipments are small for now, by one estimate rail could be carrying 100,000 barrels a day out of Canada by next year; others have suggested more than 75,000 barrels a day is already moving by train.
Even that is only the beginning: Plans are being laid to carry crude from the oil sands, as rail enters a head-to-head competition with the pipelines that have dominated the oil patch for the better part of a century.
Altex Energy Ltd., the company that runs the Lashburn terminal, and is working to build others in Fort McMurray and Peace River, Alta., estimates that 10 per cent of oil sands output could one day flow on rails. Lashburn oil is already finding its way to eight terminals across the continent, and rail cars are opening up surprising new opportunities. Heavy oil sent by rail is finding new markets as shipping companies, for example, find they can burn it unrefined in ocean-going vessels.
Cenovus Energy Inc., (CVE-T31.56----%) Canadian Natural Resources Ltd., (CNQ-T29.95----%) Crescent Point Energy Corp., (CPG-T39.94----%) Husky Energy Inc. (HSE-T22.89----%) and Baytex Energy Corp.(BTE-T45.50----%) are among the companies experimenting with rail. But what started as an experiment is, for some, quickly becoming a change in business practice that stands to have a long-lasting impact on the way crude oil moves across North America.
Take Crescent Point. It has built its own facility to load rail cars and, in spring, was shipping 8,000 barrels a day by train. By summer, “we should be up to 15,000 to 16,000 barrels per day,” or a fifth of its oil, said Trent Stangl, Crescent Point’s vice-president of marketing and investor relations. The markets the company is accessing by rail are paying so much more for the oil that Crescent Point expects to pay off the loading facility in under a year.
Pipelines are still dominant – and a raft of new proposals, which would carry vast amounts of Alberta and Saskatchewan crude to the south, west and east, has raised questions over whether trains are merely a short-term solution.
Rail does suffer from one important problem: It’s expensive. In rough terms, it costs twice as much to ship oil by train, some $5 to $10 more a barrel.
That’s the reason the Lashburn tanker car is so important. Unlike the light oil that Crescent Point is pumping, the oil in this corner of Saskatchewan is heavy. It’s thick.
Heavy oil requires an expensive thinner called diluent to move in pipe. By rail, it moves undiluted, which evens the playing field on transportation costs.
And with rail, companies can rapidly switch markets, since rail networks reach most points of the U.S. – including areas, such as the Gulf Coast and California, that pipes from Canada barely touch.
That’s not to say rail is a shoo-in. The cost has made companies skeptical. Cenovus, which is boosting its daily train movements from 2,000 to 5,000 barrels this year, has supported two new pipeline proposals to move oil to the West Coast, for example.
Chief executive officer Brian Ferguson calls rail “really interesting” and a “good short-term solution for relatively small volume.” But “anything of size in terms of shipments will require pipeline connections.”
Still, rail service has some powerful backers. Tesoro Corp.(TSO-N23.251.115.01%) is building up capacity to receive 30,000 barrels a day at its Anacortes refinery in Washington state. In mid-April, U.S. Development Group LLC said it had completed an expansion at its St. James, La., terminal, allowing it to offload 130,000 barrels a day from trains.
The rail companies are pushing hard, too. Former CN chief executive officer Hunter Harrison was personally involved with launching oil movements on that company’s tracks. And CP, the company Mr. Harrison is now seeking to lead, has made oil a key push going forward. In 2009, CP moved 500 carloads of oil – about 250,000 barrels a year. By 2014, it expects that to grow to 70,000 carloads a year, or nearly 100,000 barrels a day.
CP is optimistic that its burgeoning oil business is here to stay.
“What we’re discovering as we open up our destination matrix is that rail can get to markets that pipelines don’t serve now and really have no intention of serving,” said Tracy Robinson, a CP vice-president who has helped direct the company’s crude ambitions. She pointed, for example, to the oil trains currently heading to the northeastern U.S.
“We do believe it will be a permanent model,” she said.
Anglesey Mining: LIM books first iron ore sales for 2012
Anglesey Mining (LON:AYM) said Labrador Iron Mines has recorded the first sale of ore for 2012.
Anglesey has a 26 per cent stake in LIM, which operates the James mine and a number of associated operations in the Schefferville area of western Labrador and north-eastern Quebec.
The James mine commenced its first full season of production on April 2 and is on track to mine approximately 3 million tonnes of iron ore, with a saleable production target of 2 million tonnes for 2012.
The company relayed an operations update from LIM covering the first six weeks of the 2012 production season.
The first shipment containing approximately 170,000 wet tonnes of direct rail ore (DRO) at a grade of 63.65 per cent iron departed the Port of Sept-Iles on May 19.
Going forward, at least two shipments are anticipated each month during the operating year, with the next shipment scheduled in early June.
The Silver Yards processing facility re-started for the season on May 18 and the Phase 3 plant expansion, designed to increase production capacity to approximately 2 million tonnes per year, is slated for completion in the summer.
LIM chairman and chief executive John Kearney said: "This has been an extremely positive start to 2012, as we have executed on key milestones that will ensure a successful operating season.
"With LIM's first shipment and sale of iron ore, we are off to a good start to meet our production target of two million tonnes this year."
Published: 6 June 2012
Labrador Iron boosts exports
Labrador Iron Mines (LIM) has announced it plans to lift its iron ore production to 2 mt in 2012, its first full year of operations.
LIM is Canada’s “newest iron ore producer”, beginning operations in June 2011 and exporting 400,000t of ore last year.
LIM is expanding production from its portfolio of 20 iron ore deposits around the Schefferville region in Labrador and Quebec, all of which are connected by rail to the Port of Sept-Iles in the Gulf of St Lawrence.
Mining operations in the region are seasonal and production has started at James Mine for 2012. The first shipment of 170,000t departed Sept-Iles on 19 May, five months earlier than 2011.
LIM plans to mine 3 mt in the coming months of which around 2 mt will be exported. LIM is one of several companies ramping up production in northern Quebec and Labrador around the Schefferville area.
Loading capacity at Sept-Iles is set to get a major boost when a project to build a new multi-user dock gets underway later this year. A new dock will be built out into the harbour to allow bulk vessels carrying over 300,000t to berth. Currently ore is double handled, first loaded onto small self unloading laker vessels, and then transhipped to bigger vessels moored out in the harbour.
When the new dock is completed Sept-Iles will have a capacity of 50 mtpa.
Earlier this year the Federal Government announced it would contribute C$55M, one quarter of the project cost.
Cheap western crude prices are driving the North American oil industry to find creative ways to ship oil east where refineries are struggling to remain competitive.
In recent weeks, the first rail shipment of Bakken crude oil from North Dakota arrived in Saint John amid word Irving Oil Ltd. is close to reaching a deal with an American fuel broker that would involve regular shipments of oil arriving by rail.
The net savings for shipping the crude oil, after accounting for the cost of transportation, are estimated to be about $7 to $10 per barrel, according to Pavel Molchanov, an energy analyst with Raymond James and Associates Inc., in Houston.
"It's obviously not very cheap to ship crude from the mid-section of North America to the far reaches of Atlantic Canada, but it is cheaper than buying imported crude," he said.
The discount between Bakken oil and Brent crude, the European benchmark that east coast refineries rely on for a majority of their stock, has averaged $27.75 a barrel this year, according to data compiled by Bloomberg.
Crude oil from the Bakken oilfields is cheaper than its counterparts because it is easier to extract and to refine into lighter products such as gasoline, diesel and jet fuel.
Marathon Petroleum Corp. (MPC), an independent American refiner with a network of pipelines, barges and rail operations, estimated in November that the cost of moving Bakken crude to the U.S. east coast would be about $18 a barrel.
The savings bode well for both railway companies as well as east coast refineries. Last month, Imperial oil announced its Dartmouth refinery, after years of losing money, would be put on the market.
"Many refineries in Eastern Canada currently import oil from offshore and the opportunity to be able to connect the growing supply of western Canadian oil with refineries and the demand in Eastern Canada is a primary objective of what the industry is trying to do," said Greg Stringham, vice-president of the Canadian Association of Petroleum Producers.
"We would like to replace the foreign crude imports that are coming into that market now and they are being looked at through rail proposals as well as pipeline proposals that have been brought to the fore," he said.
According to a report published this week by CAPP, the industry will continue to rely on pipelines as the dominant mode of transportation for crude oil, but in the short-term, crude oil transported by rail will increase sharply due to the ability to use rail capacity relatively quickly and in small increments as needed.
In the span of just one year, rail exports from North Dakota have risen to about 225,000 barrels per day in March from 50,000 barrels per day a year earlier, according to estimates by the North Dakota Pipeline Authority.
According to Statistics Canada, about 8,823 rail cars were loaded with oil and other petroleum products in March 2011, compared with 5,602 rail cars a year earlier.
In addition, TransCanada Corp. recently introduced the concept of a new pipeline system to transport about 625,000 barrels per day of western Canadian crude oil across the country to Montreal and potentially further east to Saint John.
"It would be a substantial benefit to have this infrastructure program because, should it be built, it will create lasting jobs, not only in the manufacturing industry but in the oil-refining business in Saint John," said John Williamson, MP for New Brunswick Southwest.
BANGOR — The modern-day oil boom in the western U.S. and Canada is fueling interest in shipping crude oil by rail across Maine to a refinery in the Maritimes.
But the prospect of long trains of oil-filled tanker cars rumbling through Maine also has state environmental officials concerned, particularly in the wake of a recent derailment that sent several tanker cars of nonhazardous materials tumbling into the Penobscot River. As a result, state officials are reviewing their spill response strategies and making other preparations.
“It definitely got my attention with 104 rail cars of crude coming through the state,” Barbara Parker, head of the Maine Department of Environmental Protection’s hazardous materials response team, said in reference to a recent oil shipment.
Pan Am Railways and Montreal, Maine and Atlantic Railways are both exploring the feasibility of moving vast amounts of crude to an Irving Oil refinery in St. John, New Brunswick. Pan Am’s rail network was used to successfully deliver the first shipment of 100-plus tanker cars in late May, and MMA reportedly plans to follow suit soon.
The shipments are viewed as a potential financial windfall for railroads battling to maintain shipping volume. And for Irving, it is a chance for the New Brunswick-based refinery to tap into the massive amounts of oil flowing from wells in North Dakota and the controversial tar sands of Alberta, Canada.
Cynthia Scarano, executive vice president at Pan Am, said changes in the energy market have sharply decreased the tonnage of coal carried by the railway elsewhere on its network. So in order to achieve the shipping volume needed to remain profitable and maintain its work force, Pan Am is shifting its gaze from coal to oil.
“Pan Am is currently trying to expand its shipping base and there are a lot of new products that we are looking at, crude [oil] being one of them,” Scarano said. The expansions could allow Pan Am to add several additional 15-person crews, she said.
Irving officials did not return calls seeking comment, and an MMA representative declined to discuss the potential crude shipments.
Trains hauling potential pollutants and hazardous materials regularly rumble across Maine, unbeknownst to or unnoticed by many people and nearly always without incident. And federal interstate commerce laws protect those shipments from possible disruption whether by individuals, organizations or local governments opposed to the materials.
“That’s why it is interstate commerce,” said Nathan Moulton, director of the Maine Department of Transportation’s rail division. “If it wasn’t, you would have a town that would stop [the shipment] and you’d never be able to get anything from A to Z.”
Because it is a natural product, crude oil, or oil that has not yet been refined, is not technically considered a hazardous material. But due to its hazardous components and potential to cause long-lasting environmental damage when spilled, crude and other oils are strictly regulated and require specially trained response teams. And crude oil spills must be reported to the state.
Rail industry groups point out that shipping dangerous and hazardous materials by rail is the safest route — with 99.997 percent of hazmat delivered in 2009 without a release caused by a train accident, according to the Association of American Railroads.
Rail accidents involving hazardous materials are down by 90 percent since 1980, the association said.
For that reason, rail is often the only allowable means of transportation under federal law for some of the most dangerous materials, such as chlorine and other chemicals that can be deadly when vaporized. As so-called “common carriers,” larger railroads also are prohibited from refusing to carry hazardous materials.
But as last month’s Pan Am derailment in Bucksport shows, train accidents do happen. And while the vast majority of accidents cause little more than a disruption to rail traffic, state environmental officials are taking an interest in what the shipments of large amounts of unrefined oil could mean to Maine.
“The transportation of crude oil across rail lines is a concern because many times, rail lines are very close to sensitive water bodies,” said Scott Whittier, director of the Maine Department of Environmental Protection’s oil and hazardous waste facilities division. “So it does present a potential threat that we need to prepare for.”
Those preparations include ensuring both DEP staff and other agencies are trained to respond to large oil spills along rail lines. DEP staffers are already trained to handle spills from the sea-going tankers and pipelines that feed or leave Portland, the second-largest oil import terminal on the East Coast. The department also is reviewing the solvency of a state oil spill response fund paid for with a fee charged on every barrel of any type of oil imported into Maine.
Parker, who is director of the DEP’s division of response services, said department staff regularly handle oil spills due to Maine’s reliance on heating oil. DEP staff also spent several weeks on the Gulf Coast helping with the response to the BP Deepwater Horizon spill.
But the so-called “tar sands oil” from Alberta is much heavier and grittier than conventional crude.
“So we have been looking at that,” Parker said. “It would be a different type of response than the lighter crude coming out of North Dakota.”
The Federal Railroad Administration’s online database of railway safety information does not contain specific data for accidents involving oil spills but does show accidents involving hazardous materials. And those statistics show that the nation’s railroads transport hazardous materials with relatively few incidents.
Nationwide in 2011, 664 hazmat cars derailed or were damaged and just 66 of those cars released materials, according to federal rail safety reports. That is on a network of railroads that logged nearly 730 million miles that year.
Since 2002, Pan Am has reported two hazmat releases from cars operating throughout their territory while MMA has reported three.
The May 29 train derailment that sent several Pan Am tanker cars over an embankment in Bucksport and into the Penobscot River was not a major incident by environmental standards, although it was a logistical challenge to clean up.
It is now believed that less than 1,000 gallons of a nonhazardous, synthetic latex chemical as well as some clay slurry leaked into the Penobscot River, home to the only sizable spawning run of Atlantic salmon left in the United States and other endangered species.
But had the three diesel-powered locomotives riding immediately in front of the derailed cars gone into the river — or had the tankers been carrying less benign chemicals, as many trains in Maine do — the situation could have been far worse. The locomotives, for instance, can each carry thousands of gallons of diesel.
“We are extremely fortunate that this was not a hazardous material or an oil spill,” Samantha DePoy-Warren, a DEP spokeswoman, said several days after the incident.
Derailments are, unfortunately, simply a part of business for railroads — always have been and always will be, absent major technological changes. Trains “jump tracks” for myriad reasons.
Metal rails crack, split or buckle. Heavy rains or floods wash out the underlying gravel or cause the wooden ties to shift. Couplers linking cars together fail or are improperly adjusted. And a conductor who drives the locomotive too fast, brakes too abruptly or causes the train to lurch can easily trigger a derailment.
There were six derailments in Maine last year and five in 2010 that were serious enough to require reporting to the Federal Railroad Administration, the division of the U.S. Department of Transportation that oversees rail safety and enforcement. But figures fluctuate from year to year, ranging from 11 derailments reported in 2006 to just four two years later.
The majority of derailments in Maine happen on lines operated by Pan Am and Montreal, Maine and Atlantic, respectively the largest and second-largest rail shippers in the state. The vast majority of derailments were relatively minor incidents without spills or injuries, but others were more problematic.
In April 2006, for instance, three Pan Am cars loaded down with paper jumped the rails in Bangor and tipped into the Penobscot. The contents of some of the cars later caught fire when crews attempted to cut open and empty them. As a result, enormous piles of soggy paper that came to be known locally as “spitball mountain” sat on the banks of the Penobscot for months and resulted in paper waste drifting downstream.
The Federal Railroad Administration collects reams of safety and accident-related data. Comparing companies’ safety records is difficult, however, because of the diversity in the industry.
For example, two railroads may each report hauling freight over 1 million miles in a year. But the federal data would not differentiate between the complexity of the company’s operations that would affect the likelihood of an incident, such as one company hauling 5-car trains and the other hauling trains with 100 cars.
In 2011, Montreal, Maine and Atlantic had a train accident rate of 10 accidents per million train miles throughout the company’s network, compared with a rate of 3.7 at Pan Am and a national average of 2.8 accidents per million train miles.
Over the past decade, Montreal, Maine and Atlantic has consistently had higher accident rates than Pan Am. But MMA president Robert Grindrod said the way the federal agency calculates accident rates — by per million train miles — inflates his company’s numbers because their trains only traveled 200,000 miles last year. So if MMA only had one reportable accident it would show up as five under the per-million-miles measurement, he said.
Instead, Grindrod pointed to the fact that MMA has not had any reportable accidents on its main line during the past three years. Both of MMA’s derailments last year happened in rail yards.
“It isn’t a problem,” Grindrod said of hauling potentially hazardous substances. “We follow very rigorous safety procedures regarding our track, regarding our trains and regarding the materials within our trains.”
Representatives at both the Federal Railroad Administration and the Maine Department of Transportation — which oversees rail to a much lesser extent than the federal government — declined to comment on individual companies’ safety records.
Rob Kulat, spokesman for the Federal Railroad Administration in Washington, D.C., said his agency only enforces the laws and does not speculate on companies’ safety records.
Although the federal agency does conduct its own track inspections, the vast majority of that responsibility is left to the railroads themselves.
“The primary duty of FRA’s 90 federal track safety inspectors, along with 30 certified state inspectors, is to strategically monitor track conditions to determine whether a railroad is complying with federal safety standards,” states a fact sheet from the agency.
Federal rules require most mainline tracks to be inspected weekly and sometimes two or three times a week if the track is rated to carry passengers or freight at higher speeds. But railroads also can change their class or speed rating without receiving approval from or even notifying the Federal Railroad Administration.
Kulat said track inspection reports from individual railroads are available to the public but must be requested under the Freedom of Information Act, a process that typically takes several weeks.
Inspections are most commonly performed by railroad company crews that ride the rails in specially designed pickup trucks. Federal regulators, in addition to doing their own periodic inspections, use the company reports to perform inspection audits.
Scarano, the executive vice president at Pan Am, said that in addition to the weekly inspections by crews on trucks, her company checks each stretch of track at least twice a year using a machine that essentially x-rays the rails for structural defects.
“At Pan Am, safety is our No. 1 priority,” Scarano said.
Nevertheless, accidents still happen.
Track conditions have been the primary cause of 13 of Pan Am’s 20 federally reported derailments since 2006, according to data contained on the Federal Rail Administration safety website. The most frequent track problems involved broken rails, misaligned tracks or switch problems, according to federal documents.
Track conditions were the primary cause of 10 of Montreal, Maine and Atlantic’s 19 derailments during that time.
Railroads also are required to submit detailed reports to the Maine Department of Environmental Protection on spills or other incidents that occur anywhere on the company’s property, whether on the tracks or in the railyard.
Pan Am Railways is subjected to additional reporting scrutiny following an August 2007 incident at the company’s Rigby Yard in South Portland that also garnered the company a $475,000 fine.
According to the DEP, a substantial amount of oil emanating from the rail yard operated by Portland Terminal Company — a Pan Am subsidiary — contaminated the city’s stormwater system and Calvary Pond. The spills, which were believed to have taken place over time, presented a threat to groundwater and other local water bodies, the department stated.
A subsequent consent agreement negotiated between the DEP and Pan Am required the railroad to put down absorbent “track mats” in areas where locomotives were parked, idled, fueled or serviced. The agreement also put additional pressure on Pan Am to immediately report — and begin to clean — any spilled oil.
Since then, Pan Am has reported roughly 300 spills of lube oil, hydraulic oil or other types of oil to the DEP, the overwhelming majority of which involve quantities of one gallon or less, and sometimes as little as one one-hundredth of a gallon. In 2010, however, a ruptured fuel tank on a derailed locomotive leaked 2,800 gallons of diesel in the railroad’s Waterville railyard.
Pan Am’s Scarano pointed out that most of what is reported are equipment leaks or spills rather than tanker spills. She declined to comment specifically on any changes in company practices since the Rigby Yard case or on a 2006 diesel spill at a Massachusetts railyard that resulted in a judge levying a $500,000 criminal fine against the company.
“We work closely with the agencies,” Scarano said. “We notify them … and we take it very seriously.”
Looking ahead to the possibility of additional crude coming through Maine by rail, DEP staff said the shipments could be a positive development, benefiting the railroads as well as other industries.
“But we definitely need to be prepared,” said Parker with the DEP’s hazmat team.
The Canadian government will probably have to impose new rules on railways and their customers after four months of negotiations failed to find a formula to get grain shippers and other customers the service levels they demand.
At issue are complaints from customers that the railways fine them if their shipments are not ready on time, but the railways themselves don't face penalties if they don't get rail cars to the customers on time.
The two sides spent four months discussing the issue in a government-sponsored committee. But documents obtained by Reuters under Canadian access-to-information legislation show they failed to meet their goal of developing both a template for service agreements and a dispute resolution process.
"Despite the effort of all involved, the committee did not agree on several key issues. We are disappointed in this outcome, as are railways and shippers," the Transport Department said in an internal memo.
Canada's two main railways, Canadian National Railway Co and Canadian Pacific Railway Ltd, haul about 30 million tonnes combined of Western Canada grain annually, according to the Canadian Transportation Agency, as well as large volumes of coal, fertilizer and industrial and consumer goods.
Railways impose fines for late shipments as part of their efforts to keep tightly managed rolling stock running efficiently across their networks and provide cars where needed. The shippers are seeking agreements on a specified level of service.
Rail transportation has long been a sensitive issue for farmers, since Western Canada has no river freight system to move grain the long distances between the Prairies and ports.
In their arguments, the shippers point to a March 2011 rail freight review panel finding that said the railways provided grain shippers with at least 90 percent of the cars they ordered only 54 percent of time on a week-to-week basis.
The record was even worse on a day-to-day basis. The panel found grain shippers received 90 percent of the planned car supply on the planned day only 12 to 28 percent of the time.
The railways say they have worked hard to improve their services, and that new regulations will just stifle innovation.
"That dealt with years past, and we have moved ahead," said CN spokesman Mark Hallman. He said CN has now achieved an 85 percent success rate in delivering cars ordered to specific elevators on the scheduled day.
"There's no question that the railroads are spending a lot of time and effort on trying to manage the process and work with customers to prevent increased legislative handicaps to their business," said Raymond James analyst Steve Hansen.
The shippers are not satisfied, according to a summary of the committee discussions sent to the government and obtained by Reuters under access to information.
"After four months of meetings, the railways have not agreed to mandatory elements that would form the framework of a service level agreement," the shippers said.
"Further, railways have stated they will not discuss a dispute resolution process that would help close a negotiation and establish an agreement," they added.
"Railway customers expect more than 'best intentions' and inadequate dispute resolution alternatives when billions of dollars of rail freight services are purchased every year."
CN says it made significant efforts to achieve a mutually acceptable template and an effective commercially focused dispute resolution process at the committee, which was headed by former Alberta Treasurer Jim Dinning.
"CN is prepared to reach such agreements with all customers, large and small," said Hallman. "Through the Dinning facilitation process, however, it became clear that the shippers associations involved in the process were not interested in achieving a commercial consensus."
CP spokesman Ed Greenberg said any agreement must be based on a balance in the level of commitment each party is ready to bring to the table.
"Shippers preferring to imbalance this relationship and force significant commitments from railways without making any commitments themselves is not a position that any commercial participant in any industry would consider reasonable," he said.
Dinning, who has been in and out of both politics and industry, ended his consultations in mid-April, submitting a report to federal Transport Minister Denis Lebel.
Lebel has committed to introduce legislation this autumn, which is expected to set out basic service agreements that shippers can fall back on when direct negotiations with railways fail.
The agreements could detail the obligations of each party and performance standards, possibly with penalties against railways for poor service.
"The railways include penalties for shippers, but do not put in any commensurate obligations on themselves," Wade Sobkowich, Western Grain Elevators Association executive director, told Reuters. "Why would they? Nothing (is) forcing them. That's why we need the service level agreement legislation."
A political caveat is that a cabinet shuffle is widely expected for this summer. If Lebel is moved, it may take time for his successor to get up to speed and introduce the bill.
The number and size of trains making their way around Prince Rupert has been creating some delays for boat traffic in the area.
The issue comes when trains stop on the track crossing the road just before the dock areas on the west end of town, and extends to both BC Ferries and the Digby Island ferry.
“We're getting blocked in quite regularly, it almost seems to be timed just as we come back from the airport. It happens at least once per day on average, but it can be two to three times per day...The longest we've sat is 40 minutes, but the average is 10 to 15 minutes of being delayed,” said Craig Nicholls of the Digby Island ferry.
“There have been two or three incidents over the past month or so where movement of trains has caused BC Ferries minor delays, about 20 minutes. We work together with CN and Maher Terminals to try to avoid any delays...In order to avoid customer inconvenience we have delayed departures so to ensure all customers can make their sailings,” said BC Ferries spokesperson Deborah Marshall.
The issue was brought up at the recent Pinnacle Pellet terminal open house by opponents of the proposed Westview Terminal location due to the extra train traffic the facility would bring past the docks. The situation is further complicated by the increase in rail traffic expected with the start-up of phase II of Fairview Terminal, with some expecting four times as much rail traffic.
Rick Reed, manager of the Prince Rupert Airport, says he has personally been affected by the delays caused by rail traffic when it comes to catching the ferry to Digby Island and would like to see a resolution.
“With the increase in business at the ports, I sent a letter to [city manager] Gord Howie saying this should be talked about ,” he said.
For its part, CN Rail says it is aware of the issue and is working with stakeholders to find a solution.
OTTAWA, Ont. -- The Stakeholder Facilitation Committee working with facilitator Jim Dinning in developing a template service agreement and a streamlined commercial dispute resolution process between railways and shippers devoted five months towards a workable solution for both sides but ultimately was not able to agree on a commercial package.
In his final report, Dinning said the 15 industry members, including shippers and railway representatives, did make some progress towards establishing rail service parameters and dealing more effectively with disputes, but in the end could not overcome their different point of view.
“Shippers expected the Facilitation process to impose solutions that would provide shippers with more leverage in shipper-carrier relationships,” Dinning said. “Shippers also linked the Facilitation process to the promised (federal government) legislation and their expectations extended beyond the scope or ability of the Facilitation process intended to establish commercial tools.”
Railways, meanwhile pointed to the positive improvements since the Rail Freight Service Review.
These include becoming more customer-centric to better serve customers, changing operational practices to improve service such as the scheduled grain plan through the establishment of collaboration agreements aimed at achieving continuous service improvements.
“Railways took the position that the process should result in a high-level template to guide bi-lateral negotiations. The railways’ perspective was that they were already required to meet common carrier obligations. They were not prepared to agree to a detailed template that would prescribe the outcome of bi-lateral negotiations. Nor would they agree to be bound by this template before the legislative processes commences,” Dinning wrote.
The Committee made progress on a service agreement template by agreeing on the list of elements that might be included in a service agreement. There was general agreement on the details for a number of elements including: communications; internal escalation; protocols for local service changes; key performance indicators; performance standards; and recovery plans.
The unresolved template issues were around the accessibility to all the elements (and associated details) for all shippers, regardless of their traffic characteristics. These included: mandatory elements for all service agreements; automatic inclusion of crossborder traffic in all agreements; and performance standards and financial penalties regardless of the characteristics of the shippers’ traffic.
The Committee also made progress on the development of a commercial dispute resolution process by agreeing on: voluntary mediation; establishment of a roster of arbitrators; standard arbitration rules; final and binding arbitration decisions; and sharing of costs. The two unresolved key issues were to have the dispute resolution apply to the establishment of initial agreements and the timelines for resolving disputes.
In his final report Dinning issued five recommendations, including a service agreement template he recommended be used as a guide and a commercial dispute resolution process.
The federal government is now also looking to draft legislation to give shippers the right to service agreements with the railways and a process to establish such agreements should commercial negotiations fail.
Dinning encouraged railways and other stakeholders in the rail-based supply chain need to work together to innovate and make improvements in the functioning of the rail transportation system to keep ahead of our competitors.
“All the participants in the rail transportation system need to “up their game” to be successful in highly competitive world markets. Commercial tools such as service agreements with cost effective dispute resolution mechanisms have opened up the possibilities. Government can help create the environment to move forward but it is up to industry to implement the details to improve the framework for rail service,” Dinning said.
Canadian National President and CEO Claude Mongeau says the federal government's three-year Rail Freight Service Review (RFSR) "provided the impetus for CN and the rail industry to re-engage with customers to improve service from one end of the supply chain to the other." But he said powerful shipper interests prefer an "intrusive" regulatory approach.
"CN has achieved significant improvements in customer service in the past three years and has initiated—and continues to embrace—supply chain collaboration agreements and service-level agreements with a wide array of stakeholders and customers, both large and small," Mongeau said. "These agreements already cover a significant proportion of CN's revenue base, in forest products, grain, metals, coal, and intermodal traffic. The launch of the Service Review was a large factor in CN stepping up its game."
While CN "actively supported the facilitation process to produce a template for service-level agreements and enhanced commercial dispute resolution mechanisms," shipper participation was another story. Mongeau said.
"Shipper representatives, or the associations they represent, chose to advocate a regulatory agenda rather than work within the commercial approached encouraged by [facilitator Jim] Dinning to reach for the next level in supply chain collaboration and service agreements. They continually demanded new intrusive, regulatory intervention," the CEO said.
Mongeau asked the federal government, now that the facilitation process is complete, to carefully weigh the future regulatory environment for Canada's rail industry.
"Shippers' demands for greater government intervention in rail service are clearly misguided. This regulatory stance represents a missed opportunity to take supply chain collaboration to the next level." said Mongeau.
"Make no mistake—the intrusive, regulatory-based approach to service demanded by shippers would be unprecedented in a market-based economy. Such an approach would send mixed signals to customers and suppliers around the world about the government's approach to commercial markets for rail transportation in Canada," Mongeau said.
Canada's Coalition of Rail Shippers (CRS) issued a statement Monday applauding the Minister of Transport, Denis Lebel, for reconfirming his commitment to "introduce a bill which would give shippers the right to service agreements with the railways and provide a process to establish such an agreement should commercial negotiations fail."
The shipper statement followed one by Canadian National that sharply criticized shipper interests for insisting on regulation to ensure good service for railroad customers.
Both statements referred to an effort overseen by government-appointed facilitator Jim Dinning to bring the parties to agreement.
"The CRS appreciates the efforts of Mr. Dinning in leading the face-to-face meetings between the railways and a diverse range of railway customers over a five month period," said Bob Ballantyne, chair of the CRS. "From our perspective, the government did the right thing in establishing the facilitation process. Unfortunately, despite the best efforts of Mr. Dinning and his team, this process failed to deliver."
Ballantyne noted that a government Rail Freight Service Review report in March 2011 stated that: "the major cause of rail service problems is railway market power, which leads to an imbalance in the commercial relationships between the railways and other stakeholders."
ocal playwright Danny Schur has dubbed it Winnipeg's Berlin Wall.
University of Winnipeg president and North End native Lloyd Axworthy calls it a psychological barrier between rich and poor, "them-and-us kind of stuff."
Mike Deal / Winnipeg Free Press A CP train engine passes along the tracks at the CP Rail yards with downtown Winnipeg in the background. (MIKE DEAL / WINNIPEG FREE PRESS)
Mike Deal / Winnipeg Free Press The steeple of the Salem Mennonite Brethren Church is framed by railcars at the CP Rail yards. (MIKE DEAL / WINNIPEG FREE PRESS)
Mike Deal / The Winnipeg Free Press The sun casts a warm glow on a cyclist as he makes his way over the Arlington Street bridge. (MIKE DEAL / WINNIPEG FREE PRESS)
Dennis Lewycky looks out at the CP Rail Yards from the railing on the Arlington Street bridge. See Mary Agnes Welch story 120703 - Tuesday, July 03, 2012 - (MIKE DEAL / WINNIPEG FREE PRESS) (MIKE DEAL / WINNIPEG FREE PRESS)
RAIL YARD PRIMER
SIZE: 195 hectares, almost twice the size of Assiniboine Park. That includes the Weston yards and the Logan yards.
VALUE: $38 million, according to the latest assessed value.
WHAT HAPPENS THERE?: The rail yards are like CP's own personal Trans-Canada highway. Every bit of grain, oil, coal, lumber, automobiles and manufactured goods going east or west comes through Winnipeg on 23 to 26 trains every day.
The long, skinny Winnipeg Yards to the east are where the trains are marshalled, where cars or groups of cars are swapped in or out of long trains depending on their destination. Roughly 60 per cent of the trains just stop for refuelling and an engine change and bug out. The rest need to be re-marshalled, where cars are added and removed like a puzzle.
The Weston yards, behind the McPhillips Street Station casino and closer to Keewatin Street, is where CP repairs cars and locomotives. That's also where CP's small intermodal terminal is, where trucks pick up and drop off shipping containers.
WHAT'S COMING UP
This month, the Free Press will explore some of the big, messy questions that plague the rail yards: How much will it cost to move them? Who should pay? Is there any political or community will? Should this be a civic priority? What have other cities done with their yards and what could we build here?
New documents, stories, videos and photos will be posted regularly online. You can already read a batch of studies, including a 1985 academic paper on the topic by Premier Greg Selinger.
Later this month, the Free Press will host a public forum and brainstorming session at the News Café.
In the meantime, you can download a map of the yards, start sketching your vision for a new neighbourhood and send us the results.
If you have any questions, story ideas or angles you want the Free Press to tackle, please email firstname.lastname@example.org, join the Twitter conversation under the hashtag #railyards and visithttp://wfp.to/offtherails to comment on stories.
"We really have a tale of two cities," adds NDP MP Pat Martin. "And the great divide has always been, since 1882, this CP Rail yard track."
One hundred years ago, a city study described the North End as "practically a district apart from the city." Crossing the tracks meant a hike to one of only two bridges or a dangerous sprint across the rails, dodging trains. People who lived north of the tracks, then mostly eastern European immigrants, were "not of desirable character."
In the words of urban historian Alan Artibise, the railroads that bisected the city helped turn Winnipeg into "an unco-ordinated and socially disruptive series of self-contained ghettos."
That hasn't changed today, and neither have the tracks, a vast physical reminder of the city's segregation, the barrier that isolates one of the densest, most diverse, most vibrant and most disadvantaged parts of the city from the rest.
The symptoms of the North End's social and economic inequality are no mystery -- the oldest and most overcrowded housing, the most murders, the poorest health, among the lowest median incomes and the lowest employment and education rates.
Moving the CP Rail yards is not a new idea, nor would transforming the land into a modern mix of housing, parks, schools and businesses that connect the North End with the rest of the city solve Winnipeg's entrenched poverty problem. But it could be a transformative project in a city that shuns transformation.
It hasn't really been on the radar since the guy who is now Manitoba's bookish premier was a long-haired, inner-city rabble-rouser in the late 1970s, but that might be about to change.
In meetings over the last few months with some of the province's top politicians, the Social Planning Council of Winnipeg has made a pitch for a two-year, $1.5-million feasibility study that would lay out the cost of moving the yards and where they could go, how contaminated the site might be, how much development revenue could accrue and what a public consultation plan might look like.
In their 30-page pitch, the council cites five key reasons why now is the perfect time to launch a public debate about transforming an industrial blight into Winnipeg's most innovative neighbourhood.
"There's a basic logic to making the move now," said Dennis Lewycky, the council's executive director.
-- Winnipeg is growing, thanks to a boom in immigration, and there's a need for a whopping 83,000 new housing units over the next 20 years. Already, the city's vacancy rate for affordable housing is near zero, and attempts to increase the number of units have barely dented the problem.
-- After decades of suburban growth, the city's new long-term plan favours infill development and higher density. The rail yards are a remarkably poor use of prime downtown land at a time the city is desperate to expand its tax base and shrink its footprint and when every urban expert says density is the key to a thriving, vibrant, sustainable city.
-- The two bridges over the rail yards -- the Slaw Rebchuk and the Arlington -- are in need of major repairs in the coming years. For example, the city's capital budget notes, within the decade, the Arlington Street Bridge will need to be replaced or rebuilt. Already, $3.5 million is earmarked over the next five years to do a transportation plan, structural evaluation and conceptual design.
The social planning council is too polite to note that, at a time city hall is saddled with a multi-billion-dollar infrastructure deficit, repairing and building bridges over rail yards instead of moving the yards themselves is like throwing good money after 130 years of bad.
-- Rail is greener and cheaper than trucking, and the industry is booming -- CP Rail cleared $570 million in profit last year. With dramatic technological improvements in logistics and intermodal shipping, many argue the Logan and Weston yards are outmoded, though CP Rail officials say they "meet the company's operational requirements." Both the Weston repair yards and the Logan marshalling yards were built not last century but the one before. Several people the Free Press interviewed agreed they aren't ideal, either too small for the kinds of two-kilometre trains now marshalled outside the city or too big for a system looking to consolidate and modernize facilities. For example, CN's Symington Yards in St. Boniface are much larger, more high-tech, better located and handle twice the intermodal traffic than CP's bottlenecked intermodal yard off Keewatin Street.
-- CentrePort Canada, the agency charged with creating an inland rail, truck, air and industry hub in the city's northwestern corner, could spawn a major rethink of Winnipeg's transportation infrastructure. And the agency is in the middle of exploring the wheres, whats and hows of a common-use rail facility, some kind of terminal CP Rail, CN Rail and BASF can all use to better link train transport with trucking and industry. Staff at CentrePort Canada are quick to rein in speculation that their common-use facility might be a potential solution to Winnipeg's North End rail woes or offer a new home for CP's Weston and Logan yards. That's not what they're planning. Still, say proponents of rail relocation, CentrePort offers Winnipeg even more economic incentive to rethink rail, and the common-use facility might be a first step.
Lewycky said all this and more when he made a pitch for a feasibility study in recent meetings with Local Government Minister Ron Lemieux, Mayor Sam Katz and staff in the office of Vic Toews, Manitoba's senior federal minister.
"When we walked in, everyone was skeptical, very, very skeptical," said Lewycky.
After a half-hour of chat, though, the politicians appeared more receptive to the idea, he said. But, the Social Planning Council of Winnipeg hasn't received an official bite on its proposal and is moving on with the next step -- consulting and meeting with some of the city's movers and shakers in the business industry.
-- -- --
First, though, a reality check.
So far, no champion has emerged to really launch the issue of moving the rail yards into the public's consciousness and into the deep reaches of government.
Pat Martin has been a lone voice on rail relocation for nearly a decade, but no senior politician in power has been willing to suggest the city embark on the costly and complicated quantum leap forward that moving the rail yards represents.
Generally, the federal government has not shown much interest in championing major urban-development projects, and the city hasn't either. In recent years, infrastructure cash has been spent on small-scale projects -- community centres, sewage treatment and roadwork.
That leaves the province. Many believe Premier Greg Selinger is likely far more sympathetic to the idea of moving the rail yards, given his activism on the issue in the late 1970s and early 1980s. But the province is cash-strapped and risk-averse, and Selinger said during last fall's provincial election moving the rail yards was not a top priority.
"This is 'dare to dream big dreams' kind of stuff," said Martin, noting Winnipeg is among the last cities to straddle huge inner-city yards, and it's time the North End had the same kind of IKEA-style investment that seems to automatically accrue to the south end.
"There's a paucity of big dreamers around."
In most cities where rail yards have been redeveloped, the catalyst has been the rail companies declaring a yard surplus. That's how The Forks began and how Edmonton's old CN Yards became the site of a huge, architecturally interesting college, hipster condos, lofts and student housing with stores and a weekend farmers market nearby.
CP Rail has never publicly suggested they are ready to abandon the Logan and Weston yards and was reluctant to broach the subject, despite repeated requests for an interview.
CP, as with most rail companies, tends to be conservative, slow-moving and, lately, very successful. They're in the driver's seat and largely immune to public pressure from politicians, inner-city activists, urban planners and newspapers. Getting them to move would likely cost tens, if not hundreds, of millions of dollars.
And if reducing social and economic inequality is one of the goals of rail relocation, there may be better ways to spend millions of dollars on grassroots needs rather than grand schemes -- more affordable housing, more daycare spaces, raising welfare rates, improving inner-city schools. The list is endless.
Jino Distasio, director of the U of W's Institute of Urban Studies, says the city should not be so quick to give up what could be a strategic asset at a time when rail transport is the wave of the future.
Distasio says he is certainly open to the idea of a mixed-use neighbourhood blossoming on a brownfield blight, but Winnipeg's position in the global trade network needs to be examined first.
The yards are part of a huge and complicated transportation network with tentacles that reach into Mexico, to the Port of Churchill and beyond. Enhancing that network has been a key priority for all levels of government in recent years, the subject of many studies, trade missions, North American transportation task forces and major funding dollars.
The city would be foolish to give up a strategic asset such as the CP Rail yards without seriously considering other options, including the idea of transforming the yards into a modern, low-impact, high-tech industrial corridor, one that even includes housing and training facilities, said Distasio.
"I don't think this is a case of 'We need to get rid of this. It's a blight,' " said Distasio.
"I think this equation is more complex."
Canadian National project backed by Quebec pension fund
* Railway needed for mine projects to proceed
* Junior miners fear transport costs may run too high
* Some miners discuss developing their own railway
* Project part of Quebec's 25-yr plan to develop north
By Susan Taylor and Julie Gordon
TORONTO, July 9 (Reuters) - Canada's biggest railroad wants to build a C$5 billion ($4.8 billion) rail line to ship iron ore from isolated northern Quebec to port, a crucial link that could transform Canada into the world's third-largest producer of steel's main component.
Canadian National Railway Co's 's 800-kilometer (500 mile) project, backed by Quebec's public pension fund, is still years away from becoming a reality. Indeed, the 2017 projected start-up date looks ambitious, given the complexity of negotiations that lie ahead.
The junior miners needed to fill the rail cars want to keep a lid on transport costs, and some have even floated the idea of building their own rail line rather than signing on to CN's plan.
The proposed railway also faces an intensive consultation process with governments and local native groups before work can begin. Assuming those talks are successful, construction over the rugged terrain would take three years to complete.
Stretching from the Port of Sept-Iles on the St. Lawrence River to north of Schefferville, on the border between Quebec and the province of Newfoundland and Labrador, the line will pass numerous mining projects in the Labrador Trough - a geological formation rich in iron ore.
There are already two rail lines in the region but their capacity is insufficient to meet demand from planned new mines in northern Quebec and Labrador.
The Quebec government says the region represents potential private investments of more than C$20 billion.
The privately funded rail project is just one piece of Quebec's far-reaching Plan Nord, a 25-year plan that targets C$80 billion in public and private investments to develop a resource-rich area of 1.2 million square km, roughly the size of South Africa, with mining, renewable energy and infrastructure.
The whole plan is contentious for Quebec's aboriginal Innu people, who last week blocked access to mines and development-stage projects in the Trough in protest against Plan Nord, which they say will damage the environment and their traditional way of life.
For CN, the railroad could bring a huge boost to its annual revenue, said RBC Capital Markets analyst Walter Spracklin.
"If the contemplated mines do come through, this could be upwards of C$2 billion in annual revenue for Canadian National," the transportation analyst said.
CN needs to ship at least 75 million to 80 million tonnes a year for the project to be feasible. But Spracklin said his conservative estimate of 125 million tonnes translates into rail revenue of C$2.2 billion. In 2011, CN recorded C$9 billion in revenue.
"It's not a slam dunk," Spracklin said, pointing to heavy capital requirements, uncertainty around the planned mining projects and the sheer remoteness of the location. "It's not like there was this gem of an opportunity out there for anyone who wanted to pick it."
CN's partner in the plan is Caisse de depot et placement du Quebec, which manages the Quebec pension fund and will own a third of the railway.
"We're a long-term investor and infrastructure are the type of projects where we like to invest," said spokesman Maxime Chagnon. "We always want to have a partnership with businesses that are leaders in their sector."
The revenue numbers are big enough to stoke fear among junior miners, who need a railway to get ore to market but cannot operate mines profitably if transport costs run too high.
"Rail is definitely a service that the industry badly needs," said Sandy Chim, chief executive of Century Iron Mines Corp, which is developing the Attikamagen Lake iron-mine project near Schefferville with partner Champion Minerals Inc.
Chim worries that CN's plan, which asks miners to make minimum volume commitments and pay rates tied to the final project cost, is too profit focused and could hurt development.
He wants assurances that the railway is there to support the miners, rather than squeeze profits from them, with a long-term set rate system that ensures fair returns.
"To make Canada the third-largest producer, Canada has got to have some long-term competitiveness on a very major cost component - which is the infrastructure," he said.
Current Canadian output of the metal, which is too heavy to be transported by truck, is around 40 million tonnes a year, while top global producers Australia and Brazil have a combined output of more than 850 million tonnes a year.
Assuming the Labrador Trough projects go ahead, as well as the huge Mary River mine on Baffin Island in the Canadian Arctic, Canada could produce as much as 250 million tonnes a year by 2020, overtaking India as the world's No. 3 producer.
China is also a big producer, but the government does not release detailed production figures.
The iron-rich Labrador Trough stretches some 1,500 km along the border between Quebec and Labrador.
Mines were first developed there in the 1950s, but many closed or were sold during the 1980s and 1990s as demand fell. With the recent rise in iron ore prices, driven by rapid urbanization in China and India, the Trough is booming again.
Companies such as Century, Alderon Iron Ore Corp, and New Millenium Iron Corp are all developing projects there. Add expansions from current producers like ArcelorMittal and Cliffs Natural Resources Inc, and all eyes are on the region's limited infrastructure - especially rail.
The new production will easily surpass capacity on the region's two existing railways, one of which is privately owned by Arcelor and unlikely to be contracted out to other miners.
The second rail line, owned by Rio Tinto's Iron Ore Co of Canada, has extra capacity. But it is expected to fill up over the next three to five years as new mines start producing.
"At the end of the day, it is only one line with 80 million tonnes of capacity," said Tayfun Eldem, chief executive of Alderon. "Once you get to 80 million tonnes, that's it."
Alderon is in talks with Rio's common carrier line to ship material from its Kami project to port, but some other junior miners have held preliminary talks on building their own railway. Without a third railway, many of the new mines will simply not be built.
Century's Chim floated a plan earlier this year for a shared rail line with Adriana Resources Inc and Champion. China's deep-pocketed Wuhan Iron and Steel Co Ltd is a strategic investor in both Century and Adriana.
Chim has stepped back from that plan since then, saying he hopes talks can bring Canadian National, the miners and government together. The railway said it has been talking with customers and feels its project is robust.
"We believe in the great economic potential for the northern region of Quebec," said CN spokeswoman Julie Senecal.
A China-financed plan would also have less political appeal than the "made in Quebec" partnership of Montreal-based CN and the Caisse, the province's pension fund.
"We have a very good opportunity here to go from a region of untapped potential and to start tapping that potential and to realize the value from it," said Adam Low, a mining analyst with Raymond James in Toronto.
TORONTO – Canadian National Railway is studying a major expansion in the isolated iron ore fields of eastern Quebec. Reuters reports the Canadian system wants to build a $5 billion Canadian line north from the city of Sept-Iles through the remote Labrador Trough iron ore field. The railroad would be approximately 500 miles and not directly connect with the rest of the CN network.
The region is already home to Cartier Railway and the Quebec North Shore & Labrador [see Quebec North Shore & Labrador runs North America's heaviest train," Feb. 2012] operations on the north shore of the Gulf of St. Lawrence. It is currently unknown how, if at all, the CN line would connect with them.
The construction would be partly financed by Quebec's public pension fund give that organization ownership of one third of the new operation.
CALGARY, Alberta – Canadian Pacific announced today it has signed a new contract with Smart Sand, Inc. to ship frac sand over CP lines. The two companies also announced that a new frac sand transload facility, expected to be the region’s largest, would be built on CP’s ex-Soo Line Newtown Subdivision in Makoti, N.D. The facility is expected to open next year.
The Northern White frac sand will be shipped to the oil and gas producing regions in North America, including the Bakken Formation in North Dakota, the Eagle Ford Formation in Texas, the Utica shale region in the eastern U.S. and Canada, and Marcellus Shale area in the eastern U.S.
Smart Sand’s primary facility, which opened last month, is located on the CP’s ex-Milwaukee Road main line in Oakdale, Wis. The facility will supply Northern White frac sand to the new transload facility.
Frac sand is used in hydraulic fracturing to break open shale layers containing gas or oil. Natural gas and oil exploration and production require sand that is round and crushproof under enormous pressure, such as the Northern White sand mined by Smart Sand in Wisconsin.
Genesee & Wyoming reports strong 2Q financial results, announces pact with Canadian iron-ore miner
Today, Genesee & Wyoming Inc. (GWI) reported total second-quarter operating revenue of $217.4 million, up 3.7 percent compared with second-quarter 2011.
Same-railroad revenue inched up 0.7 percent to $147.8 million, net income climbed 17 percent to $36.4 million, operating income jumped 24 percent to $62.5 million, diluted earnings per share rose 15 percent to 84 cents, operating expenses dropped 2 percent to $154.9 million and GWI’s operating ratio declined 4.3 points to 71.3.
“GWI’s business continued to perform well in the second quarter, as revenues were in line with our expectations … and our adjusted operating ratio improved by 0.9 percentage points to 75.5,” said GWI President and Chief Executive Officer Jack Hellmann in a prepared statement. “In our North American and European operations, despite weakness in our U.S. coal traffic, we maintained an adjusted operating ratio of 75.8. In our Australian operations, the reopening of the Edith River Bridge significantly improved traffic flow to Darwin, and our second-quarter adjusted operating ratio improved to 74.9.”
Among the few lowlights in the quarter, volume tumbled 6.9 percent to 232,315 units and same-railroad non-freight revenue was flat at $62.8 million.
GWI also announced that newly formed subsidiary KeRail Inc. entered into a long-term agreement with Tata Steel Minerals Canada Ltd. (TSMC) to provide transportation services for an iron ore mine TSMC is developing near Schefferville, Quebec, in the Labrador Trough.
KeRail also will construct a 13-mile line to connect the mine to a Tshiuetin Rail Transportation interchange point in Schefferville. The mine is projected to produce 4.2 million tons of iron ore annually.
Via three privately owned railways, KeRail will haul unit trains of iron ore from the mine connection to the Port of Sept-Iles for export primarily to TSMC’s European operations, GWI officials said. The agreement and line construction is contingent on certain conditions, including necessary government permits and approvals. Track construction is anticipated to begin in the third or fourth and take three to six months to complete.
“The new contract with TSMC will further expand GWI’s operating presence in the Labrador Trough, where GWI subsidiary Western Labrador Rail Services currently provides rail services to both Cliffs Natural Resources Inc. and Labrador Iron Mines Holdings Ltd.,” GWI officials said.
With the addition of KeRail, GWI now owns and operates 66 regionals and short lines in the United States, Australia, Canada, Netherlands and Belgium.
CANADA: Canadian National announced on August 10 that five mining companies have committed to support a feasibility study for the construction of an 800 km railway to link iron ore deposits in the Labrador Trough area of northern Québec and Labrador with the Port of Sept-Îles. Cliffs Natural Resources, Labrador Iron Mines Holdings, New Millennium Iron Corp, Cap-Ex Ventures and Alderon Iron Ore will join CN and pension fund investor Caisse de Dépôt et Placement du Québec in funding studies to assess the cost and engineering requirements. CN will obtain environmental permits to allow the studies to proceed, and consultation will be undertaken with stakeholders including First Nations. 'CN will work closely with mining companies in the group and the Caisse to determine the best design and right timing for the development of rail infrastructure to tap the significant iron ore production potential of the Labrador Trough', said CN President & CEO Claude Mongeau.
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