The sight of a locomotive hauling 100,000 litres of light crude oil through a small Canadian town like Lac-Mégantic was nearly unimaginable just a few years ago.

But as North American oil production continues to outpace pipeline capacity, shipment by rail is increasingly common, and critics worry that safety regulations have not kept up with expansion.

"Even two or three years ago, shipping oil by rail was basically unheard of," says Keith Stewart, a climate and energy campaigner with Greenpeace Canada. "There's been this huge increase and it's been done without any oversight and review, and that's a huge mistake."

In 2012, less than four per cent of oil shipped through Canada went by rail to coastal refineries and export centres, but that is still more than triple the 2011 figure. What's more, the amounts are expected to increase significantly in the coming years, according to the National Energy Board.

Rail shipments of oil in Canada have gone from about 6,000 train carloads in 2009 to an estimated 14,000 this year, according to Statistics Canada and the Canadian Association of Petroleum Producers.

'There's been this huge increase [in transported oil] and it's been done without any oversight and review, and that's a huge mistake.'— Keith Stewart, Greenpeace Canada

As public debate and opposition from environmental groups has stalled the construction of some big pipeline projects from Alberta, such as the proposed Northern Gateway pipeline to B.C. and the extension of the Keystone XL pipeline to the U.S. Gulf Coast, rail companies have increased their capacity to ship oil in an attempt to become bigger players, says Stewart.

Even if all current pipeline projects are approved in Canada, national oil production will exceed pipeline capacity by one million barrels a day by 2025, and that oil needs a way of reaching the coasts.

According to a report by RBC Capital Markets, if the U.S. State Department decides not to expand Keystone's capacity, Canadian oil shipments by rail could increase another 42 per cent by 2017.

Not just the oil sands

At least some of the oil shipped by rail in Canada is not coming from the oil sands, but from the Bakken shale gas formation, a currently booming 520,000-square-kilometre oil and natural gas deposit in North Dakota and Montana, which produces more than 700,000 barrels of oil daily.

The light crude oil on board the Maine, Montreal and Atlantic Railway train that exploded in Lac-Mégantic was on route from the Bakken reserves to an Irving Oil refinery in Saint John, N.B., the company said on Sunday.

According to Stewart, producers from the Bakken area are heavily dependent on rail transportation for a number of reasons.

Unlike oil sands developments, which are expected to produce for several decades, oil wells in the Bakken formation only produce for about 10 to 12 years, so it is not always economical or easy to connect them to the existing oil pipeline in the U.S., says Stewart.

Building costly pipeline infrastructure is simply not worth it for the companies developing these wells.

"The shale oil wells are rapidly moving in a physical sense, so building a pipeline that would take 50 years to pay for itself is not economically viable," says Stewart. "With rail, you can extend the network of tracks relatively easily and service multiple wells in a certain area."

With the oil sands expected to double output, and the Bakken formation to begin producing nearly a million barrels a day within the decade, railway companies have rolled out nearly $1 billion in rail infrastructure investments and placed orders for over 30,000 new tanker cars designed to carry oil.

However, an accident like the one at Lac-Megantic may now put a dent in some of these plans.

Transport Canada slow to respond

The accident in Lac-Mégantic has also raised serious questions about the enforcement of railway safety by Transport Canada, especially the transportation of so-called dangerous goods such as oil and toxic chemicals.

In late 2011, the auditor general released a report that concluded, "Transport Canada has not designed and implemented the management practices needed to effectively monitor regulatory compliance" when it comes to the transportation of dangerous goods as defined by the ministry.

At a press conference in Ottawa on Tuesday, assistant deputy minister of safety and security Gerard McDonald said that there are currently 101 train inspectors across Canada and 35 inspectors focused solely on the transportation of dangerous goods, no less than in previous years.

McDonald also said that Transport Canada plans to hire more inspectors in the near future.

But critics worry that Transport Canada is still not doing enough to ensure public safety as oil transportation by rail continues to expand.

"I think most Canadians would be surprised to hear that rail companies are left to inspect themselves and Transport Canada goes over the paperwork," says Olivia Chow, NDP transportation critic.

"Shouldn't there be spot-checks by the government to see whether what is on paper is actually what's happening in the field?"

Chow also said that the federal government has failed to implement recommendations from the Transportation Safety Board following other derailment investigations. These recommendations include retrofitting trains with automatic braking mechanisms, though that recommendation only came in June.

According to E. Wayne Benedict, a labour lawyer and a former locomotive engineer who spent 15 years working for CP Rail and B.C. Rail, attempts at reducing enforcement costs has resulted in alarming deregulation in the industry.

"When I first started in the late '80s, there was active enforcement by Transport Canada. You never knew when they were going to show up, they'd be climbing all over the trains," says Benedict.

"By the time I left the railway industry in 2003, you could practically see tumbleweeds blowing across the tracks. You almost never saw the regulators."

McDonald said at the press conference that government oversight has not weakened, and that Transport Canada "carried out 20,000 inspections" last year and frequently audited and inspected all the rail companies operating in Canada.

Old tanker cars, old problems

According to Stewart, the possibility of oil spills from trains is greatly increased by the tanker cars used throughout most of North America.

The DOT-111A, called a CTC-111A in Canada, make up about 69 per cent of the American tanker car fleet and up to 80 per cent of the Canadian fleet, according to emails that Transport Canada sent to Stewart.

As early as 1994, regulators at the Transportation Safety Board wrote that this type of tanker car had a flawed design and that they have a "high incidence of tank integrity failure" during accidents.

"When there is a derailment they spill and rupture very easily," says Stewart. "You can no longer build this kind of design because of these problems. They can be retrofitted to make them safer but the rail industry has lobbied very hard against having to do it."

At the press conference on Tuesday, McDonald said that once the Transportation Safety Board's investigation in Lac-Magentic is complete, Transport Canada will be working closely with the rail industry to assess the continued use of DOT-111A tankers in Canada.