Updates
Later, 12:00 noon: what did I say about need for more maintenance? A reader just sent in this link. BSNF to hire more maintenance workers; more CAPEX for maintenance. "Rail-ready jobs," Mr President.
Original Post
Go to the link for the whole story, but this paragraph caught my eye:
Take Crescent Point. It has built its own facility to load rail cars and, in spring, was shipping 8,000 barrels a day by train. By summer, “we should be up to 15,000 to 16,000 barrels per day,” or a fifth of its oil, said Trent Stangl, Crescent Point’s vice-president of marketing and investor relations. The markets the company is accessing by rail are paying so much more for the oil that Crescent Point expects to pay off the loading facility in under a year.They will pay for the loading facility in under a year. Repeat: in under a year. Without tax incentives.
Remember:
a) the industry can't build tank cars fast enoughInvestors might want to re-read the last two bullets.
b) the rails were not meant to handle this much traffic; there will be need for more tracks and lot more maintenance
Disclaimer: this is not an investment site.
I have a friend who works for a large unnamed rail road in N.D. He works on maintenance. They are VERY short staffed, he works a LOT of hours.
ReplyDeleteThe problem is, you don't hire these folks and have them trained in a week. It takes years to get them properly trained.
Many can not handle the physical portion of the job. So they are going to be short staffed for some time to come.
Affordable housing is the key.
DeleteWe are seeing unemployed from other states come to the Bakken for work. But they won't come if there is no affordable housing.
I agree on the tankcar backlog but you need to learn up on the scale of US railroads. They handle 100 times more coal than oil -- more than 200 unit trains a day, most more than 100 cars. By comparison the Bakken around a fourth of the 450-500k bl/d produced is shipped by rail, so 100 tankcars is 68,000bl so 1-2 unit trains. The investment has already been made for grain and ethanol and coal (dying) and intermodal if anything North Dakota lines need traffic density.
ReplyDeleteNot to worry then.
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