The Edmonton Journal says MEC Energy has decided rail tank cars are the best way to beat pipeline congestion, later this year unit trains with 118 tank cars willhead of Bruderheim every day on CN/CP to Chicago, rail adds $20.00/barrel, western Canadian select, a benchmark blend which contains some bitumen trades at $58/bbl, a new term “dilbit” has to be figured in the equation, its diluent bitumen, keep your eye on this term in the future.
Southern Pacific Resources plans to use rail exclusively and recently moved its firstv shipments by truck to CN Rail terminal south of Ft. McMurray, then to Natchez, Miss. and onto barges to refiners in Louisiana.
Why go all the way to Natchez to transfer the oil to barges? As I understand it water transportation is still cheaper than rail. There are many Mississippi River ports north of Natchez although the most northern may be frozen this time of year.
Few refineries have unit train unloading facilities, but most have waterside unloading facilities, so they transfer to barge at a point convenient to the delta area refineries.
Perhaps the demand and economics driving the transition from pipeline and/ or water-based transportation to rail seems to be happening faster than the new facilities can be built, which may explain why this is such a cobbled-together operation. As I’ve noted before, this is an entirely new game for all the players, and they’re still trying to figure out the rules, strategies, tactics, and ‘plays’ to evolve the rail transportation method into an optimum form - the other modes have had better than a century to accomplish that.
Also, I expect that a lot of the oil business types are going to be surprised at how comparatively fast, easy, and cheap it is for a railroad or shipper to construct and get a new rail loading and/ or unloading facility into operation, compared to the other modes - with regard to obtaining governmental permits, especially environmental clearances. Which is not to say that the rail terminals are entirely exempt from some of those hassles, costs and delays, but the new terminals appear to be notably less encumbered by those items, judging by the recent spike in announcements of new facilities.
The other aspect I’m curious about is: What is the relative ‘friction’ or ‘head loss’ of pushing crude oil through a pipe, as compared to rolling it on a train ? This can get pretty complicated of course, but a tank car just carries a relatively ‘still’ stiff body of fluid, whereas a pipe incurs some friction loss along each foot of the way plus turbulence at bends and at the pumping stations, etc. I would not be surprised if rail can be roughly the same efficiency, or better - anybody know ?
And two weeks ago a tow of oil barges hit the KCS bridge at Vicksburg which shut the river down for at least a week while the Coast Gaurd did what they did. Life on the river is more complicated than it appears to us outsiders.
Pipelines are more economical Plain and simple. However the legal battles and and other issues simply aren’t worth the hassle. Without a newspaper headline that screams “Millions of Barrels of Oil Moved Safely Yesterday Without Incident” every day it will simply be not worth it, especially when Rail and barges are relatively unregulated and are pre-existing infrastructure.
Went by the name of Abraham Lincoln, as I recall . . . [swg]
But now it’s up the US Coast Guard and US Army Corps of Engineers to figure out the reasonable balance between bridges over the waterways, and their obstructive effects. As we’ve seen lately, sometimes that involves the railroad building a new bridge with less obstructions and better clearances, though Uncle Sam usually chips in towards the cost.
Yeah, I think that was his name too. Anyway this guy with his fancy schmancy education a line of bs about how railroad companies. But the idea that a noisy smoke belching monster that men have made is more important than Gpd’s own rivers was wrong for our country then and wrong for our country now. We’ve got to have Effie Afton overturned.
I have posted a link to a TV interview Hunter Harrison has given in the last week on this topic, you may find interesting. It is on the “Hunter, . . . so far” thread.