Pipeline versus rail debate alive and well

It often sounds as if there’s a well-orchestrated chorus of “we’re all in this together” from industry and government around the oil business in Canada. But every once in a while it’s evident they don’t always sing from the same song sheet.

In the discussion over the safety and environmental impacts of oil transport, the loaded language from pipeline giant TransCanada this week warning about railways is a prime example.

“A real tragedy …” said Alex Pourbaix, president of energy and oil pipelines.

“… Put the public safety at risk,” echoed chief executive Russ Girling.

Apparently, the all-for-one-andone-for-all approach to addressing the safe transport of oil and petroleum products following a recent series of pipeline ruptures and derailments only goes so far. When push comes to shove — and it often does when market share is at stake — it’s still the business world and there’s always narrow self-interest at play.

Pourbaix and Girling may absolutely believe what they said given the catastrophic derailment of a train loaded with oil that killed 47 people in Lac-Megantic, Que., in July, but their jobs mean they are hardly disinterested observers.

Their underlying message isn’t new.

The industry has championed pipelines as a safer alternative to the fast-growing shipments of oil by rail. Even Prime Minister Stephen Harper has said rail is riskier.

The issue has emerged along with record oil production in North America as political debates have delayed several pipeline projects — most notably TransCanada’s Keystone XL from Alberta to Texas.

The industry — from the producers to the shippers — has largely worked together with support from Ottawa and provincial governments in recent years to combat the relentless anti-oilsands campaigns from local and international environmental groups. The establishment of organizations such as COSIA, the Canadian Oil Sands Innovation Alliance, speak to the focus on co-operation.

However, the stark words from TransCanada at its Toronto investor day — raising the spectre of a looming catastrophe — are different. More than the content of the message, the most significant point was who said it. If Greenpeace or the Pembina Institute had labelled either rail or pipelines as a dirtier or more dangerous option it wouldn’t have created such a buzz.

Environmentalists generally bill pipe-versus-rail as a pick-your-poison choice.

TransCanada, Enbridge, Kinder Morgan Canada, Canadian Pacific Railway, CN Railway and other smaller pipelines and railways are usually portrayed as working in concert to provide transport options to oil producers. They typically don’t play up public anxiety over system failures. In recent years there has been a concerted effort — often with TV ad campaigns —

from industry and government “to better manage the message” around oilsands development.

Pourbaix acknowledged rail has a role as a “complementary, short-term solution” to the infrastructure challenges and pipeline bottlenecks. However, the warning about a “tragedy” would seem at odds with several producers — including Cenovus Energy,

Crescent Point and others — that have said rail is part of their transport options.

“Both pipelines and rail are safe for transporting energy products,” the Railway Association of Canada said this week in response to a Fraser Institute report that said pipelines are substantially safer than railways for transporting oil.

The association noted more than 99.9 per cent of the dangerous goods shipments railways move reach their destination without a release caused by train accident. The pipeline industry has virtually identical system-reliability statistics.

Regulators have imposed new requirements on railways since Lac-Mégantic and Transport Minister Lisa Raitt issued more rules Wednesday for the transport of dangerous goods through urban areas in Canada. The added scrutiny and new rules haven’t appeared to discourage plans to build more rail-loading facilities in Western Canada.

Pipeline companies are also facing pressure from the public and regulators after a number of high-profile spills in the U.S. and Canada. The State Department has examined the impact of moving oil by rail in its Keystone XL review and concluded it’s a viable, but costly, alternative to pipelines.

The pipeline ruptures haven’t had the human tragedy as LacMégantic, but they’re not inconsequential. Enbridge has spent almost $1 billion and it’s still cleaning up after 20,000 barrels of bitumen spilled in Michigan’s Kalamazoo River in 2010. Pembina and other organizations have reported spill frequencies are higher for rail compared to pipelines but volumes tend to be smaller.

There are undoubtedly unique risks with rail — tracks often pass through cities and towns and many of the tanker cars need to be retrofitted to new standards — but the safety record for pipelines isn’t so much better that it’s a black or white decision.

Ultimately, the oil industry may be better served by this dialogue.

A standard refrain in the business world when facing threatening situations is to “speak with one voice.” However, crisis communications expert Peter Sandman has said they’d be better off to “let opinion diversity show.” Sandman’s reasoning is if there are diverse opinions on a subject — like oilsands development or oil transport — then people need to learn to cope with the uncertainty and take part in a robust debate on the subject.

Of course, I’m not sure that means companies in the debate should be throwing stones at each other — especially if they also live in glass houses.