Update
After posting the story below, I went back to find another story that adds some background to crude-by-rail. This was posted February 4, 2011:
According to a great Reuters story (sent to me by a reader), the producers are now increasing their rail loadings to ship highly sought after Bakken crude to points east and west to avoid Cushing, Oklahoma, where there is a glut. Highly sought after Bakken sweet oil? Enbridge announced recently it will ship only sweet oil going forward.
Original Post
Any pipeline oil spill, no matter how small, becomes a headline. Even the tiniest Enbridge pipeline spill gets national coverage.
At every step along the way, the Keystone XL project runs into adversity. Landowners as far away as Texas don't want the pipeline running through their property. The Keystone XL has become the poster child for environmentalists wanting to stop Big Oil.
Except for small pipeline projects, it seems there are more stories of pipelines not being approved than being built.
And then we get this story, posted earlier: by the end of this year, the region's railroads will be able to handle 400,000 bbls/day. I linked the story here with other stories of shipping crude-by-rail (CBR).
Yes, shipping by rail is slightly higher than shipping by pipeline, but there are some advantages.
I used to think that the big problem for Canadian oil sands oil is that the railroads don't run north / south. Something tells me that is no longer a problem. The Northern Plains Commerce Centre in Bismarck has access to the Canadian Pacific Railroad.
Regardless of how it works out, the issue of takeaway capacity for the Bakken seems to be a non-issue.
I think there may be a tectonic shift in the way oil folks are thinking about transporting Bakken oil, and it has to do with the railroads. Who would have guessed? Warren Buffett. He bought Burlington Northern Santa Fe in 2010.
For a nice PowerPoint presentation of North Dakota's CBR terminals, click here for NDIC's conference held earlier this year (February, 2011), a PDF file.
Thus the Bakken oil train video I sent earlier. May be more relevant if only weeks later.
ReplyDelete85,000 bbls per train, 10 new rail loading facilities in ND and opens up other markets that may pay a better price to offset rail charges.
Will definitely help in the short term.
I think this is huge. You can send rail tankers to specific refineries more easily. You can sort out type of oil in different tankers if it comes to that. With pipeline spills, pipelines can be shut down for inordinate length of time; once repaired, they still need to be recertified. Now, if a pipeline is shut down, ND will have 400,000 bopd CBR takeaway capacity.
ReplyDeleteBruce, you are correct about sending rail tankers to specific refineries. Here in the Twin Cities, MN the Rosemount refinery, which is five miles inland from the river has a very large rail-yard visible from the road.. (You can also google-earth a refinery if you want).
ReplyDeletePipelines are very cost effective but they are somewhat limited as to what oil is available to them. You can "crack" and do other things to get your refined oil to spec but often it is easier to get some better crude. Bakken tends to be "light sweet crude" that is easy to refine.
It might help get refined products from lower quality crude "up to specs".
Capitalism / free market certainly is interesting. Who would have thought that the railroads would be able to do this. It just seemed natural that pipelines were the way to go.
ReplyDeleteI was thinking of a stand-alone post about something the railroads have that folks forget about (but I think Warren Buffett thinks about all the time): railroads already have their rights-of way.