May 30, 2012

Crude from the Midwest begins traversing Maine

The state’s railroads upgrade service as companies move more crude by train, to the dismay of environmentalists.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Crude oil from the Midwest has begun moving across Maine – not by pipeline, as some environmental activists fear it will someday – but by railroad.

click image to enlarge

A train carrying 104 tank cars of crude oil from North Dakota rolls through Massachusetts on Saturday before crossing Maine en route to the Irving Oil refinery in Saint John, New Brunswick. Rail officials say they expect a growing number of oil trains to cross Maine, part of a trend to move crude from major reserves in Alberta, Canada, and the upper Midwest.

Kevin Burkholder/Eastern Railroad News

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A train carrying 104 tank cars of crude from the Bakken oil fields in North Dakota came through Maine last weekend on a 2,435-mile journey to the Irving Oil refinery in Saint John, New Brunswick. It rolled through Portland, Waterville and Bangor on Pan Am Railways tracks, on its way to Canada’s largest oil refinery.

This so-called unit train – made up only of oil tank cars – is an example of how Irving and other energy giants are reacting to a fast-changing North American petroleum market, and how Maine figures into the developments.

“I think we’re going to be seeing more of this,” said Tom Hall, a former assistant general manager for Pan Am Railways in Maine.

New technologies and high global oil prices have made it economical for energy companies to develop mammoth petroleum reserves in North Dakota, as well as the Canadian province of Alberta. The challenge is getting all the oil to refineries across North America.

The easy-to-refine oil in North Dakota is locked up in shale formations and is released by injecting pressurized water and chemicals, a process called fracking. In Alberta, a similar process is used to free heavy, tar-like oil located in sand formations. Both methods are under fire, in part because they can pollute groundwater.

Growing controversies and delays over building new pipelines, or reversing the flow of existing ones to move this oil, are threatening production goals and export plans. That has created an unexpected opportunity for railroads, which see a void. They’re building loading facilities and adding tank cars to compete with pipelines for a piece of the evolving business.

Maine’s freight railroads stand to benefit, as well. They’re upgrading service to handle an expected increase in traffic to Saint John.

The first big shipment was made over the weekend. Each of the 104 cars carried roughly 700 barrels of oil. The train traveled through Chicago to Rotterdam Junction, N.Y., where it moved over Pan Am Railways track through southern and eastern Maine and connected with the New Brunswick Southern Railway for the trip to Saint John.

The train was photographed as it crossed the Merrimack River in Massachusetts by Kevin Burkholder, the editor of Eastern Railroad News.

“Deemed a test train, this is the first of what could be a steady flow of the rolling crude-oil pipeline to feed the Irving refinery,” Burkholder wrote last weekend in his newsletter.

Pan Am has been improving its tracks and adding locomotives and crews, making it a player in the growing crude-oil competition, according to Hall.

Pan Am operates one of three possible rail routes that can get crude to Saint John. Canadian National Railroad has another, which skirts Aroostook County and stays north of Maine. A third goes through Jackman, Greenville and Brownville Junction to reach New Brunswick via the Montreal, Maine and Atlantic Railway.

“Irving’s going to go with whoever does the best job at the best price,” Hall said.

The prospect of steady oil shipments has led Montreal, Maine and Atlantic to announce that it will double the frequency of its service from three to six days a week between Montreal and Brownville Junction. The new schedule will begin after a strike at Canadian Pacific is resolved, said Ed Burkhardt, the company’s board chairman.

Price is driving Irving’s thirst for Bakken oil, Burkhardt said. Irving’s refinery, which has a capacity of 250,000 barrels a day, primarily receives its supply via tankers from Venezuela, the Persian Gulf and the North Sea. But overseas oil now is roughly $20 a barrel more expensive, so it’s cost-effective to move some of the supply thousands of miles by rail.

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