Tuesday, April 7, 2015

Active rigs:

	4/7/2015	04/07/2014	04/07/2013	04/07/2012	04/07/2011
Active Rigs	94	194	187	208	171

RBN Energy: a look at the new EIA monthly CBR data.

According to a new set of data released at the end of March by the Energy Information Administration (EIA), crude-by-rail (CBR) movements jumped from 20 Mb/d in January 2010 to almost 1 MMb/d by December 2014. The big increase in CBR shipments has coincided with a 71% increase in U.S. crude production and has successfully helped alleviate a number of pipeline transport constraints. While overall crude-by-rail volumes have grown in the past 5 years, favored origins and destinations have changed considerably as the midstream industry has successfully re-plumbed the pipeline network to handle new crude flows. Today we review the new EIA report data on rail.

We’ve been covering the CBR scene ever since RBN started posting blogs back in 2012 – including our seminal series “Crude Loves Rock’n’Rail” that described how producers turned to rail over pipelines – first in North Dakota and later in other shale basins. Historically, crude-by-rail transport dominated the early oil industry in North America - underpinning John D Rockefeller’s monopoly. But it’s use declined after WW2 once pipelines were built to ship larger volumes of crude over longer distances. Pipelines have been almost always preferred since then because (once built) their freight costs are generally lower than using rail or trucks. More recently however, surging crude production from shale overwhelmed existing pipeline take-away infrastructure leading to significant constraints and price discounting – particularly in the Midwest. As a result, at the end of 2010, producers (led by innovators EOG and BNSF) turned to the railroads to deliver crude past congested pipelines to coastal markets where netbacks (crude sales price less transport costs from the wellhead) were considerably higher.