Crude Oil, Pipelines and Railcars

While debate has centered on the Keystone pipeline, more crude oil from newly developed production sites is moving by railcar, with seemingly nobody noticing.The pending Keystone XL Pipeline remains a national symbol in the battle over climate change. But some of the warriors may have slipped out of their battle trenches and hopped onto rail cars.

According to the Association of American Railroads, much of the newly discovered crude oil in places such as North Dakota are being transported on trains, not by pipelines. As recently as 2008, there were only 9,500 carloads of crude oil moving on U.S. rail lines. Last year, the number of carloads increased nearly 25 times to 234,000 carloads. In the first quarter of this year, there were 97,000 carloads.

While regulatory and political eyes have been glued to the prolonged saga of whether President Obama would approved the Keystone pipeline, rail car movements of crude oil have exploded under the radar screen.

That changed somewhat after a 73-car train carrying crude oil barreled down a hill and incinerated a small town in Quebec a few weeks ago. But that hasn't appeared to slow down the momentum of crude oil rail transport, as evidenced by a newly inked deal for a trans-shipment facility at the Port of Vancouver along the Columbia River.

Rail advocates say moving crude oil from remote regions in North Dakota, Montana and Texas on railcars is cheaper and safer than building new pipelines. They cite U.S. Department of Transportation data showing the spill rate for railroads carrying crude oil is 2.2 gallons per mile, compared to 6.3 gallons for pipelines.

However, pipeline backers counter that pipelines are strictly regulated, as evidenced by the Keystone decision, while at least so far there is little regulation of crude oil shipping by rail.

Beyond a competitive turf war between railroads and pipeline operators, the question most on average people's minds is safety. Railroad officials say they are "continuously striving to improve safety." Pipeline officials note there are already 81 pipelines carrying crude oil into the United States from Canada and Keystone would be a newer and safer No. 82.

Keystone has emerged as a line in the sand over climate change, even though whether it is built or not won't have much impact on actual oil consumption. The safety issue involved with transporting crude oil on railcars, usually to port facilities in urban areas, tends to center on local debate over construction of a trans-shipment facility, such as the one proposed in Vancouver.

Pipelines and railcars both have advantages and serious issues. Interestingly, there hasn't been a push nationally to talk about them together or even recognize they are parallel developments flowing from a burgeoning oil and gas industry in North America that offers more energy independence and potentially cheaper prices, while posing new dangers and another delay in facing up to the challenges of man-made climate change.