Rail merger could bring more tar sands to Southeast Texas and train traffic to Houston neighborhoods

A major merger could create the first direct route from Canadian tar sands mines to the Gulf Coast, while another proposed route would ship more of the polluting fuel from Utah.

By Katie Watkins, Houston Public Media and Amal Ahmed, FloodlightFebruary 15, 2023 10:31 am, , ,

From Houston Public Media:

This story was produced in collaboration with Floodlight, a nonprofit news site that investigates climate issues.

When Lindsay Williams moved into her home near the railroad tracks on Houston’s east side, she knew freight trains would pass by regularly. What she wasn’t expecting were trains longer than a mile frequently stalled for hours on the neighborhood tracks, blocking multiple intersections of traffic during the day and rumbling her house at night.

“A few nights ago, we had a locomotive just idling right outside our home for six hours throughout the night, shaking the entire house,” Williams said.

In the coming months, the rail traffic problems could get worse. Two major North American railways, Canadian Pacific and Kansas City Southern, have proposed a $27 billion merger that would make it easier to move freight across North America with the first unified continental rail network. The merger is awaiting final approval from U.S. regulators. In Houston, that would mean an additional eight trains passing through each day.

However, the rail merger doesn’t just pose more inconveniences for residents of Houston’s East End. If it goes through, it would create the first direct route from Canada’s bitumen oil sands mines in Alberta to heavy crude refineries in Port Arthur, an industrial city on the Texas coast.

“We fully expect that the combination of the two railroads will only strengthen their support for this new source of bitumen,” the vice president of USD Group, a Texas-based midstream company, told a Canadian newspaper last year. Oil sands are already being shipped to the Texas coast by pipeline and rail. The rail merger and another proposed rail line from Utah is set to increase that amount.

Local environmentalists say the increase in fossil fuel refining along the Gulf Coast will impact their health — and increase carbon emissions. It also could put residents like Williams at risk of a hazardous oil spill. “I live close enough to the track that if there is a derailment, and there is hazardous materials, it’s going to impact me directly,” she said. “Not to mention all of the hundreds of other residents that these lines are on — it’s pretty alarming.”

Katie Watkins / Houston Public Media

A freight train stopped at a crossing in Houston's East End. Trains in the neighborhood have stopped up to eight hours, according to a neighborhood funded security camera.

In Houston, one local coffee shop owner says business can drop up to 40% when trains block customers from making it in. Educators have shared stories of students crawling under or between train cars to make it to school on time. And city data shows fire trucks and ambulances faced delays nearly 1,400 times in 2021 due to stalled trains blocking their typical routes.

Williams and others in her neighborhood put up a security camera facing the tracks and discovered that roughly one-third of the trains that pass through come to a complete stop, idling on average for about an hour. In the most severe cases, trains stopped for upwards of six hours.

A spokesperson for Canadian Pacific said the company has “met with Houston-area leaders to discuss the merger and has committed to facilitating ongoing meetings as part of our voluntary mitigation.”

On Feb. 3, residents of East Palestine, Ohio, experienced the dangers from accidents firsthand when a train carrying chemicals crashed and exploded and 2,000 people had to be evacuated. Train derailments aren’t uncommon— in 2021, there were more than 1,000 train derailments across the U.S., according to the Department of Transportation.

The merged rail company wouldn’t be the only rail line looking to bring more oil sands to southeast Texas. In Utah’s oil sands-rich Uinta Basin, a Fort Worth-based railway, Rio Grande Pacific Corp., has proposed a railroad that could cut through a national forest and then connect to existing routes that run parallel to the Colorado River — the drinking water source for 40 million people — to bring even more oil sands to refineries on the Texas coast.

Oil from the Uinta Basin is currently shipped to Salt Lake City, and production from the basin is capped at about 80,000 barrels, said Deeda Seed, the senior public lands campaigner at the Center for Biological Diversity.

But if the railway opens up access to Gulf Coast refineries, production from the Uinta Basin could increase fourfold, to 350,000 barrels a day, according to a government estimate. Local officials in Utah seem to have indicated their support for the plan: a regional governmental body paid out $28 million in public funds to finance research and permitting for the privately owned and operated railway.

A dirtier fuel

Oil sands, sometimes referred to as tar sands, contain bitumen, a hydrocarbon, that’s trapped between molecules of sand, water, clay and other substances. Extracting the bitumen is an intensely polluting process. Because of how destructive the process is, particularly on land that is vital to Canada’s First Nations, oil sands mining has long been controversial. And from a climate perspective, refining bitumen into usable types of fuel, like gasoline, also takes more energy and pollutes more than refining other, lighter fuels. A 2014 study from the Congressional Research Service estimated that refining oil sands produces 14% more carbon dioxide than conventional oil, for example.

“Tar sands are an extra heavy oil and require a specialized refinery to refine it,” said Josh Axelrod, a senior advocate at the Natural Resources Defense Council. “Most of the world’s heavy oil refineries are located [in Texas], so that’s why all efforts point there.”

Map via the merger's Environmental Impact Statement

Shipping oil via rail isn’t that common. The all-time high for oil shipment in the U.S. was 11% in 2014. Pipelines are typically more cost effective. But the Canadian Pacific and Kansas City Southern rail merger would make shipping oil by rail cheaper, as the companies would no longer have to pay fees to transfer between tracks owned by different companies. The merger came on the heels of the Biden Administration canceling the controversial Keystone XL Pipeline proposal in 2021. That pipeline would have increased overall capacity to move Canadian oil sands to the Gulf Coast. Other pipelines, like the Dakota Access Pipeline and Canada’s Trans Mountain, have also long been targets of environmental advocates hoping to shut them down.

The two rail lines have already signed a 10-year deal with ConocoPhillips Canada and USD Group to haul tar sands across the continent to USD’s terminal . For its part, USD Group has stated in its annual reports with the SEC that existing rail lines — such as those currently operated independently by Canadian Pacific and Kansas City Southern — offer a less bureaucratic alternative to new pipelines.

Kansas City Southern did not respond to requests for comment. When asked about the potential increase in oil sands imports, a spokesperson for Canadian Pacific cited the Surface Transportation Board’s environmental analysis, which concluded that the federal agency “does not expect that the Proposed Acquisition would result in an overall increase in the transportation of energy resources, including oil.”

Katie Watkins / Houston Public Media

Freight trains run throughout Port Arthur bringing supplies to the port and industrial facilities. A rail merger will increase traffic bring oil to refineries along the coast.

The belly of the beast

In Port Arthur, freight rail lines already course throughout the city, passing close to homes as they bring shipments to the refineries and petrochemical plants. The city itself was founded by Arthur Stilwell, the same man who founded what’s now the Kansas City Southern Rail Line. Stilwell wanted a deepwater port and a rail line that could connect the Gulf of Mexico to the Midwest, serving as a key export and import hub. When in 1901, the Spindletop oilfield was discovered in nearby Beaumont, Port Arthur was transformed into an oil and gas hub. Today, the city is home to the largest refinery in the U.S.

Pollution from refining stands to get worse with the increase in oil sands refining.

“Bringing that very waxy and toxic oil here poses a great deal of problems,” said John Beard, a Port Arthur native who founded the group the Port Arthur Community Action Network. “Why are we doing this? Why are we bringing this into our community and in such close proximity to where people live?”

In Port Arthur, USD Group says that the producers have used a proprietary blend of product called DRUbit that is “formulated to be non-hazardous and non-flammable for transportation by rail.” But advocates say that an oil spill would still be catastrophic.

According to the environmental impact statement for the Canadian Pacific and Kansas City Southern merger, a total of nearly 13 “releases” of hazardous materials could occur every year along any point of the rail line, up from the potential for 10 per year currently.

“One of the problems with oil trains in general is that they are incredibly heavy,” Axelrod said. “If one of these derailed or ruptured at a water body, that would be the worst thing– [the oil] would undoubtedly sink.”

What’s more, as the planet warms, derailments could become more frequent since temperatures above 105 degrees can increase their risk of happening, according to the environmental impact statement for the merger. In Houston, climate change is projected to increase the number of days exceeding 100 degrees in the 2030 decade.

Residents who will be most impacted by the rail routes also expressed feeling left out of the environmental review process. The Surface Transportation Board, which has to approve the merger, held only one public meeting in Texas– and that was in Beaumont, 85 miles east of Houston last fall, said Melissa Beeler, formerly an advocate with Air Alliance Houston. She said the draft environmental impact statement left out the scale of the changes coming to Houston neighborhoods specifically.

Map via the Environmental Impact Statement

“The data that was available was pretty generalized and doesn’t come down to what people experience on a day-to-day basis,” Beeler said. Air Alliance Houston has advocated more air monitoring to understand how idling traffic impacts hyper-local air quality, for example.

Freight rail transportation is expected to double by 2045–meaning that increases in train blockages, pollution and the risk of potential accidents could be here to stay.

In response to some of these community concerns, the final environmental impact statement was updated to add the rail companies have made “a commitment to meet regularly with community representatives in the Houston area to work with communities to address concerns” and that there will be a platform for residents to report stopped trains.

The Surface Transportation Board declined to comment on specifics of the merger or the Uinta Basin project, saying both matters were still pending. The agency’s spokesperson said a final decision on the merger was expected within the next few months, and a decision on the Uinta Basin line won’t be made till a pending court case is settled.

“The burdens are going to fall largely on communities already facing environmental justice issues already — beyond the railroads, thinking of cancer clusters and port emissions, truck distribution centers, truck traffic,” Beeler said. “This is compounding air quality and public health impacts for our communities.”

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