To Avoid Horrific Rail Disasters We Need More Pipelines

Email
    Text size
In the wee hours of July 6, 2013, a freight train derailed. The accident sent several cars hurtling downhill into the small Quebec town of Lac-Mégantic, close to the American border.

The train was full of crude oil, and the cars, without any brakes or engine power, went smashing into the center of town. The ensuing explosion leveled Lac-Mégantic's homey, lakefront downtown. Thirty buildings were destroyed.

Fifteen are known dead as of now, with another forty still missing. The town's library and archives, containing the town's most important historical documents, are gone. Its economic lifeline is now badly frayed, hit by a runaway freight train.

The Sûreté du Québec, the provincial police, have already begun a criminal investigation to determine the reason why the oil tankers were decoupled from the engine, and why the brakes on those cars failed.

The authorities will discover the immediate reasons for the crash in the fullness of time, there's little doubt.

But it's what those cars were carrying that bears more scrutiny.

It was oil.

The cars were carrying hundreds of thousands of gallons of crude oil, from the Bakken formation in North Dakota.

The Bakken oil has been a boon to the Midwest, bringing jobs and development. The oil is so plentiful that it will go a long way toward making the United States, finally and forever, free of its addiction to Middle Eastern oil.

As we've reported before, oil is coming out of the Bakken so fast - 242 million barrels in 2012 alone - that a large series of bottlenecks have developed in the race to get the oil from North Dakota to refiners and consumers.

Oil transit bottlenecks have developed at numerous points around the country, most recently in Oklahoma.

There's plenty of oil to be had, it's just a question of actually getting it around the country that's become the problem.

In the absence of pipelines, trains are the only feasible way to do this.

In the rush to use the Bakken oil an accident like Lac- Mégantic was only a matter of time. In fact, as horrible as the loss of life and property is, we may have been lucky it wasn't any worse.

Pipelines aren't a perfect solution. As we've seen with the lively debate over KeystoneXL, there are pros and cons. They're far from a perfect solution.

But so long as we continue to use oil as a fuel source, we'll need to use pipelines to transport the oil with any reliable degree of safety. Whenever anything large and relatively complex as a train is used to carry anything as volatile as crude oil, the risks multiply.

The principle of "everything that is not prohibited is inevitable," a bedrock of law and physics, works against us.

There is a plan in the offing to construct a pipeline in the vicinity of Sidney, Montana, for the express purpose of transporting the copious amounts of Bakken crude. The $542 million pipeline is only part of the infrastructure build out that part of the country will experience.

ONEOK, Inc. (NYSE:OKE) subsidiary, Oneok Bakken Pipeline, is planning to invest between $3.6 and $4.2 billion in the region between 2011 and 2015, all for Bakken products. Natural gas liquids, natural gas gathering and processing, and crude oil are all targeted by Oneok.

The company is one of the single biggest players in the Bakken now, and it owns some 3,500 miles of expanding infrastructure. Shares of Oneok are down a bit from their 52-week highs, but are holding up nicely.

There will be more pipeline coming to the Bakken. The alternatives just aren't workable in the long run. Once the Bakken oil is really flowing freely, the exports can begin in earnest.

While we're all waiting for the Bakken oil to get un-stuck, you're sure to enjoy reading Dr. Kent Moors' free 2013 Oil Forecast. In the forecast, Dr. Moors reveals the lowest oil prices we'll ever be likely to see. Click here for the forecast.