Chemical industry defends safety efforts after criticism from railway executive

“I think our biggest challenge is to reassure the public,” he told a CIBC conference on Wednesday, adding that rail remains a cost-effective way to move goods across the country.


Canadian chemical producers denied Wednesday that they are “dragging” their feet in purchasing safer railway cars, after the head of Canadian Pacific Railway accused the country’s petroleum, chemical and commodity producers of persistently stonewalling such efforts.

“We need to continue to improve with regulations and practices regarding safety, which is exactly what we do and the reason why we have such an advanced program in this area,” said Richard Paton, president of the Chemistry Industry Association of Canada.

“Yes we have to continue to improve the cars to make sure that the right car is there for the level of danger or risk of the product and we’re doing that,” he said.

Hunter Harrison, who has been CEO of Canadian Pacific (TSX:CP) since mid-2012 and before that headed Canadian National Railways (TSX:CNR), singled out shippers in an interview published Wednesday in the Globe and Mail newspaper.

“The root of all this is the dollar sign,” he said of the decades’ long efforts to hamper reform by large shippers who own the vast majority of North America’s tankers. “We can fix all this stuff, it is fixable.”

The veteran and highly regarded railway executive also said “turmoil” and “bureaucracy” are hampering the adoption of precautions that are needed to avoid further accidents like the deadly Lac-Megantic derailment in Quebec.

Harrison said it’s up to regulators to require sturdier rail cars, tighter safety rules and stiffer penalties, including jail time, for companies and employees who knowingly mislabel hazardous goods or fail to obey existing regulations.

But Patton said it takes time to produce a safer railway car and have it field tested.

That leaves chemical producers like those in the chlorine sector scrambling to buy as many mid-level tankers they can find until supercars with double hulls and extensive safety features get thorough testing and go into production. So far only a few of those advanced units, which cost 2 1/2 times that of a conventional car, have been manufactured for testing.

One company, for example, is spending about $75 million over five years to replace about 500 tank cars in its fleet with interim cars each costing about $150,000.

“Delays isn’t just us, it’s right around the board — design, development, tests. It’s a lot of things that come into this picture rather than just the shipper,” Louis Laferriere, the association’s director, technical and sustainable logistics, added in an interview from Ottawa.

The leaders of the association that includes both of Canada’s largest railways as members acknowledged that safety is a big issue since the derailment that killed 47 people in Lac-Megantic, but said that Canada’s railways are among the safest in the world for transporting dangerous goods.

“We’ll really need to address what happened at Lac-Magentic and correct that but, at large, it’s not an indication of a system in a bad state at all,” Laferriere said.

July’s derailment that devastated the Quebec town’s centre involved a train operated by Montreal Maine & Atlantic Railway, which was moving tanker cars with crude oil on their way to an Irving oil refinery in Saint John, N.B.

Canadian Pacific moved the cars along an earlier stage of its journey from the source in the U.S. Midwest.

CN’s chief executive, Claude Mongeau, said shipment of dangerous goods by rail remains very safe but that tragic events such as Lac-Megantic require the industry to reassure the public.

He said 99.997 per cent of dangerous goods safely reach their destination by rail without release but such a statistic means little in the face of disasters like the Lac-Megantic tragedy.

“I think our biggest challenge is to reassure the public,” he told a CIBC conference on Wednesday, adding that rail remains a cost-effective way to move goods across the country.

“From a spill standpoint, railroads are as safe, if not slightly safer than pipelines. From an accident standpoint, this accident was tragic. But you look back over … 15 years, very few fatalities in the rail industry (have been) caused by the movement of dangerous goods.”

Mongeau said Montreal-based CN expects to double its shipments of crude from last year to 70,000 carloads this year and increase that again going forward.

He said that growing shale oil from the Bakken region of North Dakota would have had trouble getting to market had it not been for rail. About two-thirds of such oil is moved by rail.