Oil by Rail...

Some of the pipeline backers' contortions are downright laughable. in the most recent issue of TRAINS is this whopper on page 7:

"The Manhattan Institute's calculations purported to prove that railroad spills are 33 times  more frequent than pipeline spills per ton-mile. That conclusion was possible only by including railcar spills of less than 5 gallons, but excluding them for pipelines"

---PCJ

The people of Mayflower AR are not too fond of pipelines.

I read somewhere that 90% of the proposed Keystone pipeline capacity will be hauled by rail by the end of either this year or 2014 

I live along the line that the oil trains and all the other associated rail traffic (sand, drilling pipe, etc.) travels on.  The train volume has jumped dramatically and many in the towns along the line are complaining.  A pipeline would be more efficient and in the long run that's what we'll have.  The main reason we don't already is the corruption by special interest money in Washington DC.

Kent in SD

How is a pipeline more efficient when it doesn't give the refinery the choice to use any supplier in any quanitity at any time?  You are stuck using the pipeline source and end for many years.  Plus they have to dilute the oil so it runs through.  Train can carry the oil in its natural state and perfect blend needed for the refinery.

Never understood why town complain about rail traffice.  Its cleaner and safer than road traffic and the rail was there first.

Now just were did you read THAT? Have you ever seen crude oil in its "natural state"?

Now just were did you read THAT? Have you ever seen crude oil in its "natural state"?

Trains keep more people employed long term than pipelines.

Wouldn't it be nice if more people thought this way?

But, doesn't that run up the cost?

Kent in SD

Not at this point in time. Some of the lowest cost oil in the US has no pipelines available.

This apparently complex issue is much simpler than it appears. From what I can ascertain, refiners are driving the issue. They want oil to refine from the cheapest source available now. That's new domestic sites. It seems many would use a pipeline if they could, but they don't exist. Exclude the Canadian oil situation, which is fraught with exaggerated forecasts. Valero is driving a rail solution for it's Canadian operations. US refiners are employing rail solutions to get these new domestic sources to the refinery as soon as possible.

They are purchasing their own railcars and in total have created a backlog of orders for the oil cars.

BNSF is running 100 car trains from SD (Bakken Shale crude) almost non-stop. 

Even with all of that considered, they can still get the product cheaper than foreign oil. If the metrics for a pipeline would work, they would drive that solution.(and will, at some point)

I simply stated the current net effect "Trains keep more people employed long term than pipelines". It appears to be true at least for the next decade.

Background on Diluted Bitumen

One of the types of crude oil derived from the Canadian oil sands is bitumen, a heavy, sour oil. Bitumen would not flow through a pipeline efficiently, so it is mixed with diluents to be readied for pipeline transportation as diluted bitumen, or ‘dilbit.’ Diluents are usually natural gas condensate, naphtha or a mix of other light hydrocarbons.

More than 97,000 rail carloads of crude oil were delivered in the United States during the first quarter of the year. That's 20 percent more than the fourth quarter of 2012 and 166 percent more than during the same period last year. Rail shipments of grain, metallic ores and minerals declined, however. Oil companies are moving more of their oil by rail because pipeline capacity can't keep up with North American production gains. Last week, a pipeline planned from Texas to California was shelved because of the lack of shipper interest, though for rail, there's been relative surge in crude oil traffic. It remains to be seen if that can be sustained

I think I need to get some new oil cars for my railroad!  Oil by rail is still a small part of the revenue that railroads are making, but its the fastest growing.  I have read that some of the pipline companies are buying and or leasing rail cars as well as building storage facilities to offload oil, etc. to support the oil by rail effort. With more energy independence, seems like one more reason on our side for more manufacturing to be done in North America.    

A few years ago, during the great building boom where everyone with a welfare check was told by Congress and President Clinton they could now afford a big new house, shipments of lumber really took off!  There weren't enough bulkhead flat cars around to haul the stuff fast enough.  So, a small leasing company had a fleet of new ones built.  By the time they were delivered around 2008, the entire market had crashed.   The brand new cars were sent to South Dakota and were stored on the miles & miles of unused track of the Dakota Southern Railroad.  Ultimately the leasing company went bankrupt and the cars were scrapped.  They never hauled a load.  The only one who made money off the deal was Alex Huff, owner of the Dakota Southern who was well paid for car storage.  At any rate, I'd be careful about buying a bunch of new tank cars.  

Kent in SD

Pipelines are not considered to a public utility since they can move only one commodity from one specific place to another.  Therefor they do not have the right of eminent domain.  They cannot cross a railroad, or any other property, unless the owner is willing to let them.  No new pipelines will be built unless the railroads are willing to let them cross their track.  Many pipelines were built on railroad right of ways and some were even built by railroads.  It will be interesting to see how this plays out.  Can the railroads make more money moving oil or leasing rights of way to pipeline companies?

UP is beginning to double track the Glidden Sub between West Jct Houston and San Antionio TX. Traffic is coming from the Eagle Ford play.  Could you immagine trying to get a pipeline trough the west end of the Houston area, where people with money live?

Also, with tank cars, the product can more according to demand, without having to go through EIS processes, because the reacks are already there. 

There is a place for trucks and pipelines and railroads, the one that makes the most economic sense will be the one that is used. 

That tar sand oil is about the dirtiest stuff around. What many are wondering is whether we should be spending billions on a pipeline to facilitate the transportation of all this dirty crude to be burned at a time when global warming is becoming so critical.

Hot is right.

First you have to understand that there are MANY differing types of crude. Then you need to add in the mix of Natural Gas oils (equivalents).  There are more than 2.6 million miles of liquids and gas pipelines in the USA. These pipelines are quite a bit more safe than rail and truck transportation.  Furthermore they handle an order of magnitude more material than rail and truck combined. One small pipeline can carry more than a 100 car (2000bbl/car) "oil can" train very easily, at a much reduced cost.

Next you also have to realize that these pipelines interconnect at hubs around the US.  Refiners negotiate with the production companies (or produce in house) and are able to buy a number of grades or commodities to "charge their systems" in the refinery.  This has to be... due to refining capabilities of the individual refineries... For instance the Canadian Oils sands material are heavy and sour, and can be shipped through interconnecting systems (after processing in local bitumen "upgraders") to the domestic refiners that have sour crude units and coker units to make the full use of the material in the most environmentally productive (economic too) ways.

Sour or heavy - actually no crudes are "burnt"...  there are too many fractions that can be drawn from them to make that reasonable these days.  Everything MUST BE and IS refined to a higher grade fraction to be used for energy production, transportation fuels and chemical feedstocks.  There are even operations on the pipelines that take mixed materials between pipeline pigs and clean up that stuff for apropos usage.

Rail and trucking are short term solutions.  The pipeline infrastructure WILL be built, it just takes time and investment. There are thousands of miles of pipelines in the works. The backlog on steel piping is enormous. When completed, the rail and trucking will reduce accordingly.

Finally,  the Keystone XL pipeline (just one of many) is not an economic issue as it is privately owned, but an environmentalist one. The information about the pipeline running through the Ogalalla Aquifer was over hyped.  There are already more than 3000 linear miles of "hazardous materials"  (read oil and gas) pipelines there.

And just to throw a bomb on the whole thought process...isnt it at least marginally better to spill a little oil (via pipe or rail or truck) than to continue to fund middle east prosperity AND conflict?

 I love the "Dirty Oil" propaganda. Whats dirty about it? Just because it has to be processed more? They inject steam down into the Bitumen to separate the oil from the sand(boilers usually heated by Natural Gas). I think New York City emits more "greenhouse gases" in one week than one year of total Oil Sands production. How much does it compare to Super Tankers emitting "green house" gases(plus oil spills), let alone the Tyrants/Dictators that have to be appeased to buy Canadian"Clean" oil. Al