Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable

[Guest]

Yeah. You'd say No.

Ok Jan.

Keep telling yourself that.

[canadas canadas + 136]

On 9/17/2019 at 3:55 AM, Jan van Eck said:

Yes.  That railroad (originally built by the Canadian Pacific  ["CP"] )  was sold to private interests and ran from Montreal into a junction at a little town in Maine  (Jackman), and then via a continuation to the Irving-owner rail line from the New Brunswick border to the refinery which, together with the port and shipyard, so dominates the port of St. John  (again, not to be confused with the farthest East Canadian port of St. Johns  (note the "s"), in Newfoundland.  This short-cut line mostly hauled timber and wood products, until the CN mainline that runs up and around Maine on only Canadian trackage trough the Gaspe got clogged and oil trains could not be accommodated.  So the oil trains would run from the Bakken fields in North Dakota apparently over the CP trackage to the big CP rail yards in Montreal, there to get handed off to the CN.It turns you that when the CN had limited capacity the freight was then handed off to the MMA, that spur-line company  (Montreal, Maine and Atlantic).  There was a crew switch arrangement on the hill outside Lac Megantic which is where one unit train was left unattended and it tolled away, plowing into downtown and incinerating the place (with 47 dead).  The explosive nature of the cargo suggests that the crude had volatiles such as propane dissolved into the light crude, which the shipper had not separated prior to loading. 

Irving Oil bought that crude because itwas cheaper than their usual ME Saudi stuff.  After the train wreck the Bakken oil was shipped to an engine-change point in Niagara Falls, NY, where CSX  (Chessie System) took it over and ran it along the Mohawk River route into the Port of Albany, NY, there to be trans-loaded onto oil tankers of the 60,000 ton class.  The tankers then took the loads down the Hudson River and up around Cape Cod and the Gulf of Maine into Irving. 

Irving went back to buying crude from the Saudis when the Saudis did a little local price war to buy their customer back.  I think Irving still buys Bakken crude on the spot market (they could have some longer contracts, I don't have good intelligence on that).   Whatever they would buy, would come via the Port of Albany.  The CP no longer runs rail service past Montreal and the CN has stopped one main line into the Maritimes due to track overhaul costs, so it is left with but one line and that is heavily booked.  Oil is not a priority cargo so the water route is typically used for everything, both Bakken crude and ME stuff. 

Irving sells extensively into Northern New England, especially in the heating-fuel market  (#2 oil), and also totally dominates the retail business in the Maritime Provinces.  The Irving family are the billionaires there; they also control most of the timber lands in New Brunswick, and thus are the source of dimensional home-construction lumber in New England.  However, that market is in collapse as people are abandoning New England,due to out-of-control taxes, State budget deficits, and unpayable debts threatening defaults and bankruptcies on the New England States (and New York State).  Irving Oil is now getting burned by the Saudi supply disruption.  Couldn't happen to a nicer bunch of guys;  Irving is notorious for cutthroat business practices.  (P.S.  I personally loathe the people of the Irving Oil business.)

"especially in the heating-fuel market  (#2 oil),"   I find it interesting how this is usually diesel oil and not some special fuel oil as marketing has made many homeowners believe.

[canadas canadas + 136]

On 9/16/2019 at 7:24 PM, Pavel said:

So, their daily production is cut by 20%, after the attack on Saudi oil... Time for the pipeline in Eastern Canada...

If that pipeline directly serves the Irving refinery, are they going to want to pay for it since pipelines are very expensive or will they somehow get the Canadian government to pay or will it be half and half?  

[canadas canadas + 136]

On 9/17/2019 at 3:55 AM, Jan van Eck said:

Yes.  That railroad (originally built by the Canadian Pacific  ["CP"] )  was sold to private interests and ran from Montreal into a junction at a little town in Maine  (Jackman), and then via a continuation to the Irving-owner rail line from the New Brunswick border to the refinery which, together with the port and shipyard, so dominates the port of St. John  (again, not to be confused with the farthest East Canadian port of St. Johns  (note the "s"), in Newfoundland.  This short-cut line mostly hauled timber and wood products, until the CN mainline that runs up and around Maine on only Canadian trackage trough the Gaspe got clogged and oil trains could not be accommodated.  So the oil trains would run from the Bakken fields in North Dakota apparently over the CP trackage to the big CP rail yards in Montreal, there to get handed off to the CN.It turns you that when the CN had limited capacity the freight was then handed off to the MMA, that spur-line company  (Montreal, Maine and Atlantic).  There was a crew switch arrangement on the hill outside Lac Megantic which is where one unit train was left unattended and it tolled away, plowing into downtown and incinerating the place (with 47 dead).  The explosive nature of the cargo suggests that the crude had volatiles such as propane dissolved into the light crude, which the shipper had not separated prior to loading. 

Irving Oil bought that crude because itwas cheaper than their usual ME Saudi stuff.  After the train wreck the Bakken oil was shipped to an engine-change point in Niagara Falls, NY, where CSX  (Chessie System) took it over and ran it along the Mohawk River route into the Port of Albany, NY, there to be trans-loaded onto oil tankers of the 60,000 ton class.  The tankers then took the loads down the Hudson River and up around Cape Cod and the Gulf of Maine into Irving. 

Irving went back to buying crude from the Saudis when the Saudis did a little local price war to buy their customer back.  I think Irving still buys Bakken crude on the spot market (they could have some longer contracts, I don't have good intelligence on that).   Whatever they would buy, would come via the Port of Albany.  The CP no longer runs rail service past Montreal and the CN has stopped one main line into the Maritimes due to track overhaul costs, so it is left with but one line and that is heavily booked.  Oil is not a priority cargo so the water route is typically used for everything, both Bakken crude and ME stuff. 

Irving sells extensively into Northern New England, especially in the heating-fuel market  (#2 oil), and also totally dominates the retail business in the Maritime Provinces.  The Irving family are the billionaires there; they also control most of the timber lands in New Brunswick, and thus are the source of dimensional home-construction lumber in New England.  However, that market is in collapse as people are abandoning New England,due to out-of-control taxes, State budget deficits, and unpayable debts threatening defaults and bankruptcies on the New England States (and New York State).  Irving Oil is now getting burned by the Saudi supply disruption.  Couldn't happen to a nicer bunch of guys;  Irving is notorious for cutthroat business practices.  (P.S.  I personally loathe the people of the Irving Oil business.)

Do you know if they got charged anything for this terribly tragic accident in any way or were they given a free pass?