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Moody's: Quebec train disaster to raise costs for shipping oil by rail

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(Globalpost/GlobalPost)

CALGARY - Credit rating agency Moody's says it expects the deadly train disaster in Lac-Megantic, Que., to make shipping oil by rail more costly, putting pressure on both major railroads and oil producers.

Moody's says the disaster will inevitably lead to increased scrutiny and result in regulatory delays from Canadian and U.S. governments.

That's expected to increase capital and operating costs for rail companies — as has been the case in the past.

Crude producers in North Dakota's Bakken region — the origin point of the oil-laden train that derailed and exploded over the weekend — are expected to take a hit.

About two thirds of North Dakota's daily production — at 727,000 barrels per day in April — moves to market by rail in the absence of sufficient pipeline capacity.

Moody's also says the Lac-Megantic disaster will put pressure on the Obama administration to approve TransCanada Corp.'s (TSX:TRP) Keystone XL pipeline, which has been stuck in regulatory limbo for years.

http://www.globalpost.com/dispatch/news/the-canadian-press/130711/moodys-quebec-train-disaster-raise-costs-shipping-oil-rail