Nice Update on Crude-By-Rail

Link here to The Bismarck Tribune.

Several story lines, a lot of data points.

The best story line for faux environmentalists: rail less safe than pipe for shipping oil. Irony. The lack of adequate pipeline is not due only to the actions of faux environmentalists, but those actions have certainly contributed to the problem.

The environmental fears carry an ironic twist: Oil trains are gaining popularity in part because of a shortage of pipeline capacity — a problem that has been worsened by environmental opposition to such projects as TransCanada's stalled Keystone XL pipeline. That project would carry Bakken and Canadian crude to the Gulf of Mexico.

Wayde Schafer, a North Dakota spokesman for the Sierra Club, described rail as "the greater of two evils" because trains pass through cities, over waterways and through wetlands that pipelines can be built to avoid.

Some interesting data points:

• better routing can result in more than an additional $700,000 / train in profits
• in 2009: 10,000 train cars carrying crude oil
• in 2012: estimated 200,000 train cars carrying crude oil
• this is just the start: most from the Bakken, but cars soon to be added for Texas, Colorado, and western Canada
• rail will be a long term business for oil because trains are faster than pipelines (I did not know that; it's counterintuitive); reliable; and flexible
• BNSF at one million bbls per day; will increase
• BNSF will invest almost $200 million in track upgrades, other improvements in the Bakken
• BNSF also increasing train lengths from 100 oil cars/unit train, to 118; that's almost a 20% increase
• sounds like a huge industry, but overall, crude oil shipments represent less than 1 percent of all carloads

Also from the linked article:

Oil-loading rail terminals can be built in a matter of months, versus three to five years for pipelines to clear regulatory hurdles and be put into service, ...

The surge comes at the right time for railroads: Coal shipments — a mainstay of the rail industry — have suffered because of competition from cheap natural gas.

In the eastern U.S., CSX and Norfolk Southern railroads haven't seen as much growth because oil from the Marcellus Shale area of Pennsylvania, Ohio and New York is close enough to refineries that trucks haul the crude. [Lots of crude on the highway.]

Yet BNSF is beginning to haul Bakken crude east to Chicago, where it hands off the tank cars to CSX or Norfolk Southern for delivery to Eastern refineries. It has also sent oil to the West Coast, a trend that could increase if Alaska crude production falters, as some industry observers are predicting.