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 October 17, 2013
Moving shale oil across melting tundra: huge and potentially risky business

 When the sun shines directly on the Hudson Bay Railway (HBR), the tracks can expand, warp and buckle. Trains have to slow down to 9 miles an hour or even stop. Journeys can be delayed for hours.

At the northern end of the rail line sits the Port of Churchill. It has been barely used over the years and is accumulating rust and leaking oil from its tank farm while the vast, icy expanse of Hudson Bay slowly melts in the background.

Denver-based railway company OmniTRAX Inc. is planning to ship more than 330,000 barrels of light crude oil along the railway to the port for shipment to Europe. The venture is designed to be a test run to attract investment for regular rail shipments of oil from the Bakken Shale formation in the United States and from Alberta's bottlenecked oil sands facilities to Churchill, Manitoba.

From there, it would be pumped into tankers and shipped across the ice-free Hudson Bay to Europe. Churchill residents and others familiar with the treacherous northern Manitoba terrain are nervous about the enterprise, however, even with the prospect of oil riches flowing into this isolated and job-hungry town.

The HBR runs for 810 miles from the Pas, Manitoba, to Churchill, a town that, at the moment, is best known for wandering polar bears in its vicinity. For much of the oil's rail journey, which can take more than a day, the track runs over the second-largest peatland on Earth.

Railroad on a 'mattress'

And the peatland, essentially 13 feet of frozen peat moss topped with 16 inches of permafrost that seasonally thaws and refreezes, is melting, according to Rick Bello, an associate professor of geography at York University.

"It's a giant mattress, really," Bello said, adding that he's experienced as much as 18 inches of displacement between rail cars as they roll over a depression.

"The train rocks back and forth at times," he added.

The instability of the track can make the journey north to Churchill treacherous. Bello said it can take 48 hours to get from Winnipeg, Manitoba, to Churchill, about 625 miles. A comparable journey, from Chicago to Philadelphia, typically takes Amtrak around 18 hours.

The track was finished in 1929 but received $20 million in upgrades in 2007. Between 2003 and 2012, the track still saw 63 accidents, and all but 10 were derailments.

When the sun beats down directly on the tracks, they can expand and buckle, Bello said, a phenomenon called a "sun-kick."

And although spills on the track aren't inevitable if appropriate precautions are taken, Bello said the track would still have an impact on prices.

"This is going to put an added expense on shipping," he said. "Increasing usage of the rail line, regardless of what's being shipped, brings up red flags."

Resurrecting a neglected port

Steve Gould, who has lived in Churchill for 35 years and worked for five years at the tank farm outside the port in the early 2000s, says the railway isn't his biggest concern.

"I don't think that's the risk. The risk is the equipment down there, the equipment and maintenance of the tank farm," he said.

OmniTRAX also owns the Port of Churchill, which it bought for a token $10 from the Manitoba government in 1997 right after buying the HBR from Canadian National Railway Co. for $11 million. The port got $20 million in renovations of its own in 2007, along with the railway.

Last year, after the closure of the Canadian Wheat Board, which accounted for around 90 percent of the port's business, it received $25 million more, spread over five years, as transition funding to diversify the port's business.

"We have to look at any and all ways of continuing to grow traffic through the port," OmniTRAX Canada President Merv Tweed said in an interview with the Canadian Broadcasting Corp. "The return on that is the fact that communities create jobs and opportunities."

Gould doesn't argue that Churchill, with a transient population of around 1,000, could use the business; he just doesn't think the port could handle the kind of volume OmniTRAX is talking about bringing.

When he was at the tank farm, Gould said, it took workers almost five hours to unload nine rail cars of oil. With most rail cars able to hold 600 to 700 barrels, OmniTRAX's 330,000-barrel test run would involve more than 470 rail cars at minimum, enough to fill one Panamax-class tanker.

According to news reports, the company hopes to fill 10 Panamax tankers per season, from July through October, starting next year or 2015.

"I don't understand logistically how they're even going to try it," Gould said.

Breached pipeline

In order to transport the oil from the rail cars to the tankers in the water, the oil is pumped into several tanks in the Churchill tank farm, then piped through three pipelines about a third of a mile to the port and onto the tankers. OmniTRAX bought the tank farm, an independent operation, in 2000, but hasn't upgraded it since, and the tank farm hasn't seen regular shipments of oil since its contract to store oil for the government of Nunavut expired in 2008.

And one of the pipelines is cracked, according to multiple sources with knowledge of the facility's current state. The compromised section, a double-walled fiberglass portion that runs underground beneath a slipway in the port, was breached at least a year ago, they said, verifying the information independently.

According to the sources, who asked to remain anonymous in order to share details of the facility, the inner wall of the pipeline has cracked, but the outer wall remains intact. While fugitive oil is minimal right now, they said, the crack, which they called a "breach," would likely worsen if large volumes of oil were pumped through.

In an email, Tweed responded that the three pipelines underwent pressure testing a few weeks ago.

"No external pipeline leakage was detected through the testing," he said. "However, we have concluded that the pipelines are not viable and will remain out of service, to be replaced by newly constructed lines, if required for the future."

OmniTRAX President Darcy Brede recently announced the port would receive $2 million in upgrades to its oil-handling system, according to the Thompson Citizen. The upgrades will boost the port's oil-pumping capacity to about 3,000 gallons per minute from the current 800 to 900 gallons per minute, Brede said.

Gould's biggest fear doesn't even concern the pipeline, however. According to Gould, even if the oil safely navigates the rail line and the tank farm, a spill in the frigid Hudson Bay would be almost impossible to clean up with the equipment on hand.

OmniTRAX 'cut corners'

"You're in an Arctic environment, so there are a lot of inherent dangers. If something goes wrong, there's not a lot you can do about it," Gould said.

When training for the Coast Guard in Churchill several years ago, to measure the strength of the tide Gould was asked to drop a stick in the bay and walk alongside it. Soon, he was jogging to keep up.

"So it's moving fast," he said. "Now extrapolate that to your response time, and you've got minutes. So unless you have everything in the water at the time, it's gone."

Not only would the Hudson Bay's unusually strong tide carry spilled oil out to sea in minutes, but it would also be too strong for the spill-response booms and skimmers kept in Churchill for that very situation, according to several sources.

"If they don't have equipment on site, then it's just worthless, not to mention the stuff we had on site was worthless," Gould said.

OmniTRAX, he added, "cut corners until they don't have to cut corners."

Responding from southern Ontario

Churchill's environment makes a potential spill that much harder to deal with, but if there is a spill, the nearest emergency response team might be thousands of miles away.

The Canada Shipping Act mandates that Canadian ships and oil-handling facilities located south of the 60th parallel and certified by Transport Canada need to have a contract with a certified response organization. There are four certified response agencies in Canada. The Eastern Canada Response Corp. (ECRC) is responsible for the area stretching from Alberta all the way to the Maritimes, including Churchill and Hudson Bay.

Paul Pouliotte, ECRC's chief financial officer, said the company's main equipment is kept in Sarnia, Ontario; Montreal; and Quebec City. Sarnia is closest to Churchill, about 1,200 miles away -- slightly closer than it is to Nassau in the Bahamas.

Pouliotte, who couldn't confirm whether ECRC works with OmniTRAX, said ECRC's response to a spill always depends on several factors. He said he "couldn't hazard a guess" how long it would take to respond to a spill near Churchill.

That said, a spill on the way to Churchill may not be as devastating as spills elsewhere in North America, namely the Lac-Mégantic explosion in July that killed 47 people in a small Quebec town 150 miles east of Montreal.

Churchill residents say the Lac-Mégantic tragedy has framed much of the debate around OmniTRAX's planned oil shipments there. The railway runs through downtown Churchill, and any mention of "oil" and "train" in the same sentence in town evokes the infamous Lac-Mégantic fireball -- especially since OmniTRAX is planning on shipping the same oil through Churchill that exploded in the Quebec town.

But a similar explosion would be hard to replicate around Churchill, especially out on the soft, spongy peatlands, said Gregory Patience, a chemical engineering professor at École Polytechnique de Montréal.

According to Patience, an oil-bearing rail car would need two key ingredients to trigger an explosion: sufficient heat -- more than 35 degrees Celsius (95 degrees Fahrenheit) -- and an ignition source, which could be anything from a spark to a lit cigarette.

In the northern Manitoba wilderness, both ingredients may be hard to come by.

"Churchill is probably an ideal place to ship oil to because usually it's very cold there," Patience said.

Threat to the 'polar bear capital'

Although explosions may be less likely, a spill could still be devastating to northern Manitoba's delicate ecosystem.

Known as "the polar bear capital of the world," Churchill attracts tens of thousands of tourists every year, who trek to the remote town to go on Arctic safaris in search of the bears and the area's other wildlife, including seals, caribou and beluga whales.

Michael Goodyear, executive director of the Churchill Northern Studies Centre, said the region's ecosystem is "sensitive to any type of disturbance," especially its aquatic environment.

"Anyone who's traveled north of Thompson Manitoba by rail recognizes just how much water there is," he said. "It's hard to distinguish water from land."

A spill into the water could affect wildlife from migratory geese to moose, Goodyear said.

Polar bears, Churchill's most famous residents, don't rely as heavily on the local water, but a spill could be just as deadly for them.

Gregory Thiemann, an associate professor at York University, has been studying the polar bear subgroup in Churchill since 2002. Climate change is slowly thinning their numbers, he said, as longer ice-free summers mean more bears struggle to find food. He estimates the populations' numbers have dropped 20 percent in the last 20 years, down to about 1,000.

An oil spill, while not directly affecting the seals that constitute almost their entire food supply, could still be devastating for them, Thiemann added.

"Oil for polar bears is a very significant threat," he said, adding that experimental evidence from the late 1970s and early 1980s found that when polar bears got covered in oil, they licked it off, ingested it and got kidney failure.

If there was an oil spill in a waterway near a group of polar bears, Thiemann said, the oil could "easily" get into their denning habitats.

"That would certainly be detrimental, and potentially, depending on the size of the spill, catastrophic to the population," he said.

And any impact on Churchill's ecosystem would in turn affect the town's vital tourism revenue, residents said.

Back to the drawing board?

For the ailing town, it remains unclear exactly how many jobs oil shipments would bring to the town, or when shipments would begin.

The 330,000-barrel test run, originally targeted for this month, has been delayed as OmniTRAX will continue community and stakeholder meetings over the coming months. The company announced it will be sharing information and further plans during that period.

Industry leaders have been drawing attention to rail's safety record. Shipments of crude by rail in North America have increased from 500 in 2009 to more than 130,000 this year. Over the past decade, the estimated spill rate, measured as gallons spilled per million barrel miles moved, was 0.38 for crude moving by rail and 0.88 for pipelines, according to the Railway Association of Canada.

"When you aren't aware of all the facts, it's easy to misunderstand what's being attempted or what we're trying to do," Tweed said to the CBC. "We will do it with all the environmental and safety issues dealt with as regulated."

Canada's ruling Conservative government is also seeking more ways to get Alberta's copious oil sands crude out of the country as approval for the Keystone XL and Northern Gateway pipelines sputters.

Churchill residents are suspicious of the Conservatives' opinion, however, given that Tweed was appointed as OmniTRAX Canada president in August hours after he resigned as a Conservative member of Parliament in Manitoba and almost a year after lobbying records show he met with an OmniTRAX consultant.

The Manitoba government recently came out saying the plan was too risky, with the province's transportation minister saying OmniTRAX should go "back to the drawing board." Since the railway is under the jurisdiction of the federal government, though, it would have final say over whether the plan goes ahead.

The test run is on hold while the company continues consultations, Tweed said. All Churchill residents can do, for now, is wait.

And they've been waiting for a while already. When Gould first moved to Churchill in 1978, the population was 2,000 and the port was bustling. Its numbers have slowly dwindled since then -- at about the same rate as the polar bears in recent years.

"Churchill definitely needs another form of business up here, one that's going to invest and have jobs," he said. "I hope they don't have stupid people working on this."