MONTREAL (AFP) - Death and destruction unleashed on a Quebec town when a runaway oil tanker train derailed and exploded has put a spotlight on the challenges of transporting oil by rail, versus pipelines.

Construction of new pipelines has been unable to keep up with surging North American oil production, in part due to regulatory delays over concerns raised by environmental activists, and so a lot of crude is being shipped by rail.

For energy producers across North America railways are a last resort to get their oil to refineries for processing and to markets.

According to the Canadian Railway Association, oil shipments jumped from 500 container cars in 2009 to 140,000 this year, while environmental activists stepped up their fight to block approvals for new pipelines across Canada and the United States.

Some 234,000 trains, a more than tenfold increase over the same period, each carrying about 714 barrels of oil also crisscrossed the United States last year, according to the Association of American Railroads.

Derailments are down 20 percent year-over-year, according to the transport ministry, and the total amount of oil shipped by rail remains at less than two percent of all transported crude in Canada, and 10 percent in the United States.

But spills and disasters like the one in Lac-Megantic that killed at least 13 people has many saying it is too much.

The freight train operated by Montreal, Maine & Atlantic Railway derailed and exploded early Saturday, unleashing a wall of fire that tore through homes and businesses in Lac-Megantic - population 6,000.

The fire leveled more than four blocks, including 30 buildings, and forced about 2,000 residents to flee their homes in the town, which is located 250 kilometres east of Montreal, near the US border.

"This is the worst accident in the history of transporting crude by rail," commented Benoit Poirier, an analyst with Desjardins credit union.

Canada's prime minister coincidentally warned about the rise in shipping crude by rail in May when he was in New York to lobby for US approval of a cross-border pipeline to carry oil from Alberta's oil sands to the refineries on the Texas coast.

"The only real immediate environmental issue here is do we want to increase the flow of oil from Canada via pipeline or via rail," Mr Harper had said.

"If you don't do the pipeline more, more is going to be coming in via rail, which is far more environmentally challenging in terms of emissions and risks."

Another issue is that the tanker cars in the Lac-Megantic disaster are widely in use, despite concerns raised by US officials as far back as 1991 about leaks.

A US report called for their shell to be reinforced to prevent spills.

Canada has adopted similar recommendations but only insisted that it apply to new cars.

"Instead of fixing the problem, the government allowed oil companies to dramatically increase shipments of hydrocarbons" by train, putting "profits ahead of safety," said Greenpeace at the time.

The head of the Canadian Railway Association, Paul Bourque, downplayed concerns, saying that millions of cars carrying freight are transported each year by train, virtually without incident.

Ironically, oil shipments helped turn around Montreal, Maine & Atlantic Railway, which the daily Globe and Mail said had been hurt by slumping demand for shipping forestry products over the past decade.

The company said its train had been transporting 72 carloads of crude oil from the US state of North Dakota to a refinery on Canada's Atlantic Coast when it derailed in Quebec.

The train, it said, had been stopped in the neighboring town of Nantes, around 13 kilometres west of Lac-Megantic, for a crew changeover, when it began sliding downhill to Lac-Megantic.

The cause of the disaster is under investigation.