Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
http://oilprice.com/Energy/Energy-General/Rail-and-Pipelines...

"The rail building flurry has already begun and hopes to be at a 1-million-barrel capacity this year."

Wow a million barrel capacity.

And from this article http://www.theglobeandmail.com/report-on-business/industry-n...

"In 2008, fewer than 20,000 barrels a day of crude oil moved on trains in the U.S. By the end of 2012, that number had jumped above 500,000 – a more than 25-fold increase in five years."

So they are planning on doubling it in a year. That really has to make up for some pipelines not being built. Yet a lot of oil companies are still scaling back drilling plans for the year ahead.

Dan
Print the post Back To Top
No. of Recommendations: 0
"The rail building flurry has already begun and hopes to be at a 1-million-barrel capacity this year."

The statistical chance of a serious accident with a train load of rail cars full of oil is a magnitude higher than from a pipeline. More trains hauling oil just increases those odds. Rail is also far more expensive than pipelines and should probably be used only as a stopgap until the pipelines can be built.

I posted a link on the subject recently, I'll see if I can find it.



Tim


Not the one I was looking for this will do.


http://fuelfix.com/blog/2013/01/14/oil-industry-beats-buffet...

Oil industry beats Buffett in railroad investments surge

Posted on January 14, 2013 at 6:59 am by Bloomberg in Oil

North American energy companies are starting to invest more in railroad terminals than the railroads themselves.

A group of oil and gas pipeline operators led by Plains All American Pipeline LP (PAA) announced plans just in the past three months to spend about $1 billion on rail depot projects to help move more crude from inland fields to refineries on the coasts. Warren Buffett’s Burlington Northern Santa Fe LLC, the largest U.S. railroad, spent $400 million on terminals in 2012.

...

Spills are a bigger risk with trains than pipes, according to the Manhattan Institute, a New York-based policy research organization. A U.S. railway is about 34 times more likely to spill hazardous materials, including oil, than a pipeline transporting the same volume an identical distance, according to the Institute’s June analysis of data from the U.S. Transportation Department and the Pipeline and Hazardous Materials Safety Administration.

Railroads have an accident rate just two to three times higher than pipelines, Patti Reilly, a spokeswoman for the American Association of Railroads trade group, said in an interview. Railroad spills tend to involve smaller amounts in each incident, since trains carry far smaller amounts of oil than pipelines, she said.


From your own link:

The U.S. State Department found that, when moving liquids, trains have a death rate three times higher than pipelines and a fire or explosion rate nine times higher. The U.S. Pipeline and Hazardous Materials Safety Administration says that over all, pipelines beat other modes of transportation on all facets of their safety record.
Print the post Back To Top
No. of Recommendations: 3
That is the unintended consequences of the greenies being blinded by their ideology of pipelines are bad. Would be nice if there was some way to make them wear their consequences, but alas they will be complaining about rail spills some time in the future, as they drive and fly around the country thinking they are not part of the problem.
Dan
Print the post Back To Top
No. of Recommendations: 0
That is the unintended consequences of the greenies being blinded by their ideology of pipelines are bad.


Dan,

Methinks that you should add oil company CEOs who were proudly announcing to shareholders that they were cranking up production? They might have taken a few minutes to contemplate how they were going to get the crap to market as well? Pipeline companies won't build a pipeline until someone(s) comes along and asks for it complete with long term contracts.


The good news is that the recent opening of the Seaway pipeline (Cushing to the Gulf) is already having an effect on WCS pricing and will be expanded within months while Keystone is up for State Dept approval (or not) by the end of March.


Tim

http://finance.yahoo.com/news/us-could-worlds-next-major-064...

..

How US Could Be World's Next Major Oil Producer
By Anthony Grisanti | CNBC – Mon, Jan 14, 2013 1:46 AM

Will WTI crude regain its status as the benchmark for crude prices?

About two months ago, the U.S. Department of Energy started using Brent crude as its benchmark for crude prices. It appears WTI could soon be the benchmark again, though.

Over the last several weeks, the spread between WTI crude and Brent has come in from Brent to being $23 over the WTI price to under $17 over on Friday.

It is no coincidence that this price movement has happened right at the time Seaway pipeline announced plans to expand capacity of the line that takes crude from Cushing, Oklahoma where WTI is delivered to the Gulf of Mexico. This pipeline is now carrying roughly 280,000 barrels a day and by the end of the month, the number could increase to 400,000 barrels a day.
Print the post Back To Top
No. of Recommendations: 0
Tim,
My main point of the post is that other ways are being found. Maybe not the best but other ways. Keystone was supposed to add what 650,000, and they are planning on increasing rail by 500,000 next year. So almost a keystone pipeline there.Hopefully we can lower our heavy spread which I've heard is almost 50 under WTI.That's a lot of money to leave on the table.

Dan
Print the post Back To Top
No. of Recommendations: 2
Another shortage caused by the oil boom.:>) http://www.nytimes.com/2013/01/16/us/16women.html?nl=todaysh...

Although Nevada is trying to help out.

"Natasha, 31, an escort and stripper from Las Vegas, is currently on her second stint here after hearing how much money strippers made in Williston on a CNN report last year. "

Also answers the question of who watches CNN

Dan
Print the post Back To Top
No. of Recommendations: 0
So it appears that CNRailway shall still continue to be a good company to own. Even more so with this added cargo.

IKan
Print the post Back To Top
No. of Recommendations: 1
Dan,

"In 2008, fewer than 20,000 barrels a day of crude oil moved on trains in the U.S. By the end of 2012, that number had jumped above 500,000 – a more than 25-fold increase in five years."

So they are planning on doubling it in a year. That really has to make up for some pipelines not being built. Yet a lot of oil companies are still scaling back drilling plans for the year ahead.


In many cases, unit trains of a hundred or more tank cars can move on existing railroad rights of way, with no need to obtain environmental or other permits or to leap any of the many other regulatory hurdles that dedicated pipelines encounter. Further, if existing rail capacity is not sufficient, there are virtually no regulatory hurdles to expand capacity on existing rail lines, either by upgrading the existing track for higher speed and adding more sidings where trains can pass one another or by adding parallel tracks for additional capacity, and there are a lot fewer regulatory hurdles to build a new rail line than to build a dedicated pipeline.

The only real "down side" to transporting oil by rail rather than by pipeline is that one needs storage for surges at both ends. A unit train operation attains its maximum efficiency when each train can fill from storage tanks at the shipping end and empty into storage tanks at the receiving end, thus minimizing the amount of time that the train is at each terminal, and there are sufficient sidings of sufficient length, or sufficient sections of double track, so trains do not encounter delays either (1) when meeting trains travelling in the opposite direction or (2) when overtaking slower trains. Here, a line that's fully double track, or even triple or quadruple track if other rail traffic warrants, is the ideal.

Norm.
Print the post Back To Top
No. of Recommendations: 1
Tim,


The statistical chance of a serious accident with a train load of rail cars full of oil is a magnitude higher than from a pipeline.

This depends heavily on the railroad and the attitude of its management. Some railroads maintain very high safety standards while others, tragically, do not. There are two "Class 1" railroads, the Norfolk Southern Railway (NYSE: NSC) and CSX (NYSE: CSX), in the eastern United States. Norfolk Southern has long maintained the platinum standard of safety in all aspects of its operation, from frequent inspection and rigorous maintenance of its rights of way, locomotives, and rolling stock to enforcement of its operating policies, whereas CSX taken the opposite tact of minimizing maintenance and shoddy operations. Most of the smaller carriers -- regionals, short lines, and public transportation authorities, and Amtrak -- are somewhere in between. For the past decade, one has been able to make good money simply by betting, even at 5:1 odds, that every rail mishap in the eastern United States that the news media reported without naming the railroad occurred on CSX. I know of one instance in which a regional railroad repaired shared tracks in a yard owned by CSX out of fear that CSX's delapitated track would give way under its trains, causing an accident. These statistics, unfortunately, tend to reflect negligence of a few railroads rather than responsible operation by the overwhelming majority.

Norm.
Print the post Back To Top
No. of Recommendations: 0
Dan,

"Natasha, 31, an escort and stripper from Las Vegas, is currently on her second stint here after hearing how much money strippers made in Williston on a CNN report last year. "

Ah, she might not be as stupid as you suppose.

http://www.youtube.com/watch?v=OyILRoOhvyQ

If you can't watch the video, you can read the lyrics here: http://www.lyricsmode.com/lyrics/a/andrews_sisters/strip_pol...

Norm.
Print the post Back To Top
No. of Recommendations: 1
"Ah, she might not be as stupid as you suppose."

Norm,
What would make you think I suppose that she is stupid.

Dan
Print the post Back To Top
No. of Recommendations: 2
Keystone was supposed to add what 650,000

IIRC Keystone is 850,000 bpd.


Hopefully we can lower our heavy spread which I've heard is almost 50 under WTI.That's a lot of money to leave on the table.

Dan


Got this today by email from Canaccord, no link so I'll just paste it.


$52.00
What heavy oil producers in Alberta currently
receive...roughly


CRUDE OIL $94.60 +0.88
Bloomberg today does a major article on what is going
on in the Canadian oil sands and you get a taste from the
headline "Suncor Targets Spending Cuts as Alberta Crude
Collapses" or the lead "Suncor Weighing Spending cuts On
Oil Discount "
Always a boom or bust province we have enough grey
hair to remember the 80’s when the NEP killed the oil industry.
Tens of thousands of people had to leave the province
as jobs disappeared and provincial budgets were slashed.
The province only has one industry that pays the bills
and heavy oil is now a huge part of that. Without the pipelines
to get that oil out of the province, that oil is stranded
and cheap. It doesn't give you the confidence to spend
another five or ten billion dollars on another project and all
the well paid jobs it would provide. Alberta, the economic
engine for the country the last decade, is slowing down.
Bloomberg writes, “Suncor Energy is considering making
an C$11.6 billion ($11.8 billion) oil-sands project the
first major spending reduction among Alberta energy producers
as the region’s crude prices sink to the lowest in the
world.
The oil-sands benchmark, West Canada Select, traded at
a record $42.50 a barrel less than U.S. crude on Dec. 14.
Canadian companies are forgoing about C$2.5 billion a
month because of the lower prices, according to an estimate
by Houston-based investment bank PPHB Securities
LP. The discount has helped erode Canadian oil profits and
hurt companies’ shares.
Lowering production costs is one of the few options
available for producers facing shrinking commodity prices,
said Barry Munro, Canada oil and gas leader at Ernst &
Young LLP in Calgary.
“This year will challenge oil-sands companies,” Munro
said in a Jan. 3 telephone interview. “Most executives are
coming back to work focused on how to manage a margin
that has been severely depressed. That means better cost
management.”
Canadian heavy oil is being discounted because of a
lack of pipeline capacity to ship increasing volumes of
crude to higher- paying markets. The decline has been exacerbated
by surging U.S. production from reserves such
as the Bakken field in North Dakota and falling demand as
vehicles become more fuel efficient.”
Print the post Back To Top
No. of Recommendations: 1
This depends heavily on the railroad and the attitude of its management.


Norm

What part of "The statistical chance of a serious accident with a train load of rail cars full of oil is a magnitude higher than from a pipeline."
don't you understand?

Many (most in the US?) railways don't even own their own tracks and tracks are a major cause of rail accidents.


Tim
Print the post Back To Top
No. of Recommendations: 1
Tim,
Could be 850,000, still if rail is able to add 500,000 this year, we are easily at were the Keystone would have been if it had got the go ahead. So it would be running flat out already and we would still be looking for more capacity.

Yeah that discount is a killer, I wonder what price the stuff in the rail-cars is getting. Seeing it is a wash on transport price with the heavy stuff as there is no extra cost for diluent. I believe Shell is just about to come on line with 100,000 some oilsands. They can't be happy campers right now.

Dan
Print the post Back To Top
No. of Recommendations: 1
Yeah that discount is a killer, I wonder what price the stuff in the rail-cars is getting. Seeing it is a wash on transport price with the heavy stuff as there is no extra cost for diluent. I believe Shell is just about to come on line with 100,000 some oilsands. They can't be happy campers right now.

Dan



Completely agree though converting the TRP mainline to oil and approving Northern Gateway would methinks reduce the angst?

I have no idea if all of these will make it but eventually we will need them all.

Tim

http://www.albertaoilmagazine.com/2012/10/mainline-reversal-...

http://en.wikipedia.org/wiki/Enbridge_Northern_Gateway_Pipel...

And then of course there are is Keystone with final capacity of over 1 million barrels per day.

http://en.wikipedia.org/wiki/Keystone_Pipeline

Additional phases (three and four) have been in construction or discussion since 2011. When completed, the Keystone XL will add 510,000 barrels per day (81,000 m3/d) increasing the total capacity up to 1.1 million barrels per day (170×103 m3/d).[7]

And finally the Trans Mountain pipeline expansion.

http://business.financialpost.com/2013/01/10/kinder-morgan-w...

Kinder Morgan ups stakes in pipeline fight with Trans Mountain expansion

Jeff Lewis | Jan 10, 2013 3:57 PM ET | Last Updated: Jan 11, 2013 10:14 AM ET
More from Jeff Lewis

CALGARY — The Canadian arm of Dallas-based Kinder Morgan Energy Partners LP is upping by 20% the capacity of its proposed Trans Mountain pipeline expansion to Canada’s West Coast, extending its lead over transportation rival Enbridge Inc.’s Northern Gateway project in the race to deliver Alberta oil to new markets.

Kinder Morgan Canada Inc. said Thursday it has enough support from shippers to boost capacity on the Pacific-bound line to 890,000 barrels per day, up from a previous target of 750,000 barrels daily.
Print the post Back To Top
No. of Recommendations: 0
Tim,

Many (most in the US?) railways don't even own their own tracks....

No, that is not true. There are some instances in which railroads operate over tracks owned by other railroads or by commuter rail authorities, or where two railroads have agreed to joint operation of parallel routes using one railroad's line northbound or eastbound and the other railroad's line southbound or westbound, but they are the exception rather than the norm. Also, where commuter rail authorities have acquired trackage, it is usually either (1) yard and terminal areas used exclusively for servicing and storing the commuter rail's locomotives and rolling stock and (2) lines that were not receiving adequate maintenance from the railroads that previously owned them. The lines owned by commuter rail authorities are generally in good shape.

... and tracks are a major cause of rail accidents.

Yes, that was precisely the point of my earlier post.

If Railroad A maintains its tracks well and has no accidents at all, but Railroad B neglects track maintenance and consequently has dozens of accidents, the overall statistics will reflect dozens of accidents. If, OTOH, one were to do a three-way comparison of safety between Railroad A, Railroad B, and the pipeline, Railroad A might win.

Norm.
Print the post Back To Top
No. of Recommendations: 1
Some what linked article on Cushing .Makes some interesting arguments,just not sure that I agree with him. If you can move the oil to a port that changes everything.

http://oilprice.com/Energy/Crude-Oil/Oil-Glut-at-Cushing-Sto...

"Seaway Pipeline Expansion

The Seaway pipeline was recently expanded to 400,000 barrels per day from 100,000 barrels per day, and many analysts have predicted that this would solve the Cushing oil glut. But it is looking more and more that what the Seaway pipeline offers is a cheaper mode of delivery out of Cushing, and the real benefit is one of logistical optionality for transportation.

However, it is shaping up due to the sheer size of these build in inventories at Cushing that the Seaway pipeline is not a magic solution for the supply and demand fundamentals at play in the oil industry in the United States, there is just more US production, than there is US infrastructure in place to deal with the trending upturn in this production."

Dan
Print the post Back To Top
No. of Recommendations: 0
Some what linked article on Cushing .Makes some interesting arguments,just not sure that I agree with him. If you can move the oil to a port that changes everything.


Dan

In that I have to agree with you, his rambling writing makes sense only if you ignore price received as a factor?

Seaway was never going to be the full answer merely a partial stop gap measure to get product to the refineries in Texas until Keystone and other measures can help solve the lack of infrastructure.

The real issue was that those refineries were built to accept shipments from Mexico and Venezuela both of which have declined as a source.

Tim
Print the post Back To Top
No. of Recommendations: 0
...many analysts have predicted that this would solve the Cushing oil glut. But it is looking more and more that what the Seaway pipeline offers is a cheaper mode of delivery out of Cushing,




As a side note: So much again for the crap that analysts spew.


Do your own research and come to your own vision.

IKan
Print the post Back To Top
No. of Recommendations: 0
So many get sidetracked by the noise.

IKan
Print the post Back To Top
No. of Recommendations: 1
If Railroad A maintains its tracks well and has no accidents at all, but Railroad B neglects track maintenance and consequently has dozens of accidents, the overall statistics will reflect dozens of accidents. If, OTOH, one were to do a three-way comparison of safety between Railroad A, Railroad B, and the pipeline, Railroad A might win.



If Railroad C carries high speed passenger traffic and Railroad D only has regular speed passenger, the overall statistics would show some high speed traffic. If OTOH, one were to do a three-way comparison of speed between Railroad C, Railroad D, and the Dreamliner, Railroad A might win.

Alas, I have no statistics to back that up.
Print the post Back To Top
No. of Recommendations: 0
Alas, I have no statistics to back that up.


carver

If you get Norm going you won't need them, I recall him and Jammer getting into a long discussion about the quality of thread used to sew the leather seats on an Embraer aircraft once. }};-()

Stats on the subject are easy to come by, rail is significantly more likely to have a spill for the same amount of product moved per mile, the rail guys admit this. They are also significantly more expensive (the numbers are closer on Bitumen due to the dilution) and there is a limit to how much they can ramp up though they do have more flexibility while waiting for the pipelines to catch up. They also need specially built loading and unloading facilities and tanks in order to move large quantities.

Statistics are always a challenge, if one railway moves one rail car load of oil without an accident they are 100% successful while the workhorse that moves tens of thousands of rail cars full of oil and has one accident gets the headlines.

Nice to see a few of the old souls showing up here, too bad about that troll over on Energy & Utilities. Unfortunately instead of ignoring him we have people providing the audience he craves by arguing with him.


Tim
Print the post Back To Top
No. of Recommendations: 0
Carver,

Alas, I have no statistics to back that up.

I don't have actual statistics for transport of petroleum, either, but I do know that accidents in general occur over ten times more frequently on CSX than on Norfolk Southern, which are pretty comparable in all respects (rail miles, volume and types of business, region of service, etc.). The major difference between these two railroads is the culture -- one of neglect on CSX and of obsession over safety on Norfolk Southern.

Norm.
Print the post Back To Top
No. of Recommendations: 1
Tim,

Stats on the subject are easy to come by, rail is significantly more likely to have a spill for the same amount of product moved per mile, the rail guys admit this.

My earlier post did not dispute the raw statistics, but rather raised a question as to what's included in them. There are, unfortunately, railroads that are very responsible and railroads that are totally irresponsible when it comes to safety and the consequent likelihood of a spill.

They are also significantly more expensive (the numbers are closer on Bitumen due to the dilution) and there is a limit to how much they can ramp up though they do have more flexibility while waiting for the pipelines to catch up. They also need specially built loading and unloading facilities and tanks in order to move large quantities.

Yes, there is no doubt of this -- and a dedicated pipeline is also much less susceptible to disruptions caused by weather along its route than rail service. There is no doubt that a pipeline is the superior solution if one foresees more or less continuous shipment of large volumes of a product over the course of a protrated period of time -- typically at least two or three decades. That said, the funding of a pipeline should include some sort of escrow for its removal and restoration of the land at the end of its useful life.

Statistics are always a challenge, if one railway moves one rail car load of oil without an accident they are 100% successful while the workhorse that moves tens of thousands of rail cars full of oil and has one accident gets the headlines.

True. Here, though, the issue is what happens when one railroad moves tens of thousands of carloads with one accident while another railroad moves the same number of carloads the same distance with fifteen or twenty accidents. If one combines the statistics from both railroads as though they were the same, it makes the good railroad look much worse than it is.

Norm.
Print the post Back To Top
No. of Recommendations: 0
Thank you for recommending this post to our Best of feature.


You got the rec for agreeing with me.

If a railway has "the same number of carloads the same distance with fifteen or twenty accidents" they should lose a whole lot of money (including massive fines) and end up out of business.

Tim
Print the post Back To Top
No. of Recommendations: 0
Tim,

If a railway has "the same number of carloads the same distance with fifteen or twenty accidents" they should lose a whole lot of money (including massive fines) and end up out of business.

One would like that, but it hardly ever happens.

>> 1. In most cases, there's only one other railroad that operates parallel routes, so the loss of competition would create a monopoly.

>> 2. There are also very strong political forces aiming to sustain rail service to communities and shippers that would lose it if a railroad were to fail.

So the government might send out inspectors if a railroad has enough mishaps in a short enough time span, but those inspectors go away as soon as the railroad brings the offending track and/or rolling stock up to standard. Once the inspectors go away, the neglect of maintenance resumes and the cycle repeats.

Norm.
Print the post Back To Top
No. of Recommendations: 0
One would like that, but it hardly ever happens.

>> 1. In most cases, there's only one other railroad that operates parallel routes, so the loss of competition would create a monopoly.

>> 2. There are also very strong political forces aiming to sustain rail service to communities and shippers that would lose it if a railroad were to fail.




And so they are and continue to be the giants in that sector and therefore continue to be good investments (at the right price).

Monopolists with increasing cashflow and dividends, with a very high entry cost for potential competitors. What more could we ask for??? The history that I looked at shows that RR's do really well during this part of the economic cycle, as they are doing now. $$ :):)

IKan
Print the post Back To Top