For Immediate Release: Monday, July 21, 2014
Contact: Adrienne Bennett, Press Secretary, 207-287-2531
AUGUSTA – Governor Paul R. LePage signed a memorandum of agreement today with Premier David Alward of New Brunswick to encourage economic development and support job creation between Maine and the Canadian Province.
The agreement, also referred to as a Memorandum of Understanding, is designed to strengthen relations between the two regions by working together to create jobs and cooperate areas of trade development, tourism, transportation, energy, culture and emergency preparedness.
“We are pleased to continue our strong working relationship with New Brunswick,” said Governor Paul R. LePage. “We have a history of cooperating with each other, and this agreement further strengthens our commitment to regional efforts that will create economic development, improve government efficiencies and promote tourism and commerce between our state and the province.”
Governor LePage has met with New Brunswick Premier David Alward several times since 2011 to discuss economic opportunities between Maine and the Canadian Province. This is the first time such an agreement has been signed with New Brunswick. A New Brunswick-Maine Joint Committee will be responsible for implementing the agreement.
“Our government is proud to continue working with the State of Maine. This agreement will improve the quality of life in the entire region”, stated Premier Alward. “This complements several other initiatives already underway in our province. Whether it’s through increasing tourism, improving emergency management services, or strengthening the regions infrastructure, our joint efforts are vital to social and economic growth”, added Alward.
The agreement encourages Maine and New Brunswick to coordinate with their business communities to set up partnerships and implement economic development initiatives. The agreement also encourages an exchange of cross-border solutions for clean energy, such as hydropower and bioenergy, which could lower home heating costs for the people of Maine.
In April 2013, Governor LePage signed a similar agreement with Premier of Quebec Pauline Marois.
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 in 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, according to Ed Burkhardt, MMA’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. However, 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.
“Rail can land oil at Saint John at a better price than by sea,” Burkhardt said.
The most immediate factor that could limit business is the availability of tank cars, which are in great demand nationally, Burkhardt and others say. It takes roughly six days to go from North Dakota to New Brunswick, plus offloading time.
If rail delivery grows, it could help Maine’s struggling freight railroads and the shippers that depend on them, according to Chop Hardenbergh, editor of Atlantic Northeast Rails & Ports. That could help improve service to Maine’s paper mills and attract new shippers, he said.
Commerce aside, the trend has caught some of Maine’s environmental activists by surprise. They oppose the methods used to extract this petroleum — especially the so-called tar sands oil from Alberta — saying they are highly polluting.
In Maine, activists suspect that the Portland Pipeline Corp. will want to reverse the flow of its system, which moves crude oil west from Portland Harbor to Montreal, to send tar-sands oil east. The company has said it has no current plans to do that.
Environmental activists oppose tar-sands oil for two main reasons. They say the more-corrosive nature of the oil poses a greater risk of pipeline ruptures, and they point to a large spill in Michigan in 2010 as evidence.
Spills appear to be less of an issue with rail transport, however. Tank cars are typically double-lined and made of hardened steel to survive a derailment.
However, staff members at the Maine Chapter of the Sierra Club and the Natural Resources Council of Maine both say fracking and tar-sand extractions are unsustainable, dirty technologies, whether the product is moved by rail or pipeline.
“We don’t want to see that supported in any way,” said Glen Brand, a spokesman for the Sierra Club. “We don’t want to see it moved to market.”
Small quantities of tar-sands oil already have rolled across Maine.
Bob Grindrod, president of Montreal, Maine & Atlantic Railway, said his line handled a small, test delivery destined for the Irving refinery a few months ago. The potential to move more depends on the cost and how hard it is for Irving to refine the thick oil, he said.
Irving Oil rarely discusses its business practices, and it didn’t respond to email questions from the newspaper; but Grindrod said he’s aware that the refinery is ramping up its crude offloading capacity from two cars a day to 100 cars, whether it comes from the Canadian tar sands or the Bakken field.