Black gold on the tracks

Despite the safety risks, Western Canada ramps
up capacity to transport crude oil by rail

New Brunswick was the latest jurisdiction to learn first-hand about the dangers of transporting crude oil by rail. In early January, a CN train carrying oil and liquid petroleum derailed near the village of Plaster Rock in northwestern New Brunswick. The derailment forced the evacuation of approximately 150 people from their homes.

As rising oil production from shale and tight oil basins in the United States and the oil sands in Canada outpaces pipeline capacity, oil companies are turning to rail to get their product to markets that will pay the most for it. But the Fraser Institute says shipping crude by rail is risky. “While pipelines may leak, trains and trucks can crash, hurting individuals, as we saw in Lac-M├ęgantic in July 2013,” the conservative think-tank wrote last fall in a report on oil transportation safety.

Despite the risks, producers in Western Canada are ramping up capacity to ship oil on railways. The good news for Atlantic Canadians living near rail tracks? The vast majority of it is destined for refineries in the U.S.

Crude oil shipments by rail from Canada to the U.S.:

Source: RBC Markets

Source: RBC Markets

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