Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Bad News for Pipelines, Good News for Rail

By

241,000 rail tanker cars hauled oil during the six-month period ending in June, a 38% increase over the same period in 2011.

PrintPRINT
The Association of American Railroads reports the number of rail tankers carrying crude oil and petroleum products in the United States increased more than 35% during the first six months of the year when compared with 2011. After the US Energy Department, in its report, noted the lack of pipeline infrastructure in North Dakota, British supermajor BP (BP) announced it was considering rail to bring oil from the Bakken formation there to its refinery in Washington state. In terms of the environmental footprint, meanwhile, rail deliveries account for less than 1% of the total emissions from the transportation sector. These findings come even though rail shipments are three times more expensive than pipeline deliveries

The AAR finds that 241,000 rail tanker cars hauled oil during the six-month period ending in June, a 38% increase over the same period in 2011. For June, rail deliveries increased 51% over their 2011 levels for the month. Each rail tanker carries around 700 barrels of oil, meaning June deliveries translated to nearly 1 million barrels per day. The US Energy Department's Energy Information Administration attributes much of the increase in rail deliveries to the oil boom under way in North Dakota, which in March became the second-largest oil producing US state. Oil producers in the region, however, rely on rail to get oil out of the region and BP this week said it was considering a rail project to bring Bakken crude to its 225,000-bpd refinery in Washington. The permitting process could begin as early as next month.

Rail deliveries, however, cost, on average, $15 per barrel compared with the $5 per barrel for deliveries through pipeline systems. On the other hand, the rail system is getting less energy-intensive. While the transportation sector accounts for about 25% of the global energy-related carbon dioxide emissions, rail represents a minor fraction of that total. Across the board, emissions for transportation are increasing in every sector except rail, which accounts for less than 1% of total CO2 emissions for the sector.

When completed, the entire Keystone oil pipeline network could carry about 1.1 million bpd compared with the same approximate total for the entire United States for rail. The 3,100-mile Enbridge Pipeline System, which stretches from the Athabasca oil sands facilities in Alberta to oil refineries in the Midwest, can carry, on average, 1.4 million bpd. The week before last, however, more than 1,000 barrels oil spilled from a section of that pipeline in Wisconsin. While Enbridge said much of the release was contained, the incident occurred one day after the two-year anniversary of the costliest onshore crude oil spill in US history from a section of the same pipeline network. Though in terms of volume, pipeline transportation has proved its merit, the move by BP in the Bakken formation suggests rail transit remains a viable option for the industry.

This article was written by Daniel Graeber of Oilprice.com.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE