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For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.

Moderator: Jeff Smith

 #1345170  by Gilbert B Norman
 
Volks, this we don't need - and we definitely don't need the Fair Use quotation:

http://www.wsj.com/articles/irving-oil- ... 1440080588" onclick="window.open(this.href);return false;
The number of railcars carrying oil has dropped sharply compared to last year, reflecting both the worsening economics of crude-by-rail and better pipeline access to refineries on the Gulf of Mexico. The Association of American Railroads said earlier this month that U.S. Class I railroads originated 111,068 carloads of crude oil in the second quarter of the year, down 2,201 carloads from the first quarter and some 21,000 fewer carloads than the peak in 2014’s third quarter
 #1345239  by gokeefe
 
They do make it clear later on that Q3 should see an improvement. The latest reports I've been reading in the media have cost per barrel under $30 and in some claims under $20 for shale oil. That is nothing short of stunning and means that shale oil will likely be responsible for unprecedented economic growth over the next 10-20 years.

The railroads are going to be flooded with intermodal moves. Oil would just get in the way.
 #1345265  by rr503
 
I wonder if oil really made that much money for the RRs, what with all the congestion they caused and the subsequent capacity improvements they required....
 #1345354  by gokeefe
 
The money speaks for itself. If they couldn't do it they wouldn't have tried so hard. These were likely premium tariff unit train moves. Given all other economic factors especially lower traffic counts on intermodal I think it made plenty of financial sense.
 #1345426  by Cowford
 
Given all other economic factors especially lower traffic counts on intermodal...
Lower? Since the big post-recession bounce in 2010, intermodal has been growing at a steady 4-5% pace, and it's not expected to abate.
 #1345434  by Gilbert B Norman
 
Messrs. Cowford and O'Keefe, in view of that I have halved my railroad positions (and not in any panic selling owing to the Market's latest activity), I cannot share your unbashed optimism.

We must note that the East Coast ports may or may not benefit post-PANAMAX, but if they do at the expense of the West Coast ports, a line haul, say, SAVANNAH-CHICAGO simply does not equal an LA-CHI haul.

I still remain concerned for the East Coast ports that have been on a spending spree "what if they throw a party, and nobody came?". Lest we forget, the West Coast ports are not going to take the diversion lightly - and neither will BNSF and UP.

What's the solution; a TRANSCON merger resulting in a doupoly, something else?
 #1345482  by rr503
 
Gilbert B Norman wrote:Messrs. Cowford and O'Keefe, in view of that I have halved my railroad positions (and not in any panic selling owing to the Market's latest activity), I cannot share your unbashed optimism.

We must note that the East Coast ports may or may not benefit post-PANAMAX, but if they do at the expense of the West Coast ports, a line haul, say, SAVANNAH-CHICAGO simply does not equal an LA-CHI haul.

I still remain concerned for the East Coast ports that have been on a spending spree "what if they throw a party, and nobody came?". Lest we forget, the West Coast ports are not going to take the diversion lightly - and neither will BNSF and UP.

What's the solution; a TRANSCON merger resulting in a doupoly, something else?
I also don't think that we need to panic.
Domestic intermodal won't go anywhere, and will help keep the transcons busy, and so will international boxes that need speed. Combine those 2 and some slow growth in the economy (and therefore, non-coal carload/domestic intermodal), and you get only a short term impact on (western) RRs post Panama Canal widening.
You also say that East Coast ports may not benefit from the canal widening -- well, the boats have to dock somewhere, so if their "party" goes unattended, so much the better for western ports! (which would be a shame for them/NS/CSX, but then the landbridge is kept.
The eastern RRs would be to lose if the projected growth doesn't arrive. Before, that Chicago-bound box you talk about was going LA-CHI w/out touching NS/CSX, who both need all the traffic that they can get b/c of coal's decline.
 #1345485  by gokeefe
 
Cowford wrote:
Given all other economic factors especially lower traffic counts on intermodal...
Lower? Since the big post-recession bounce in 2010, intermodal has been growing at a steady 4-5% pace, and it's not expected to abate.
I stand happily corrected.
 #1345486  by gokeefe
 
Gilbert B Norman wrote:What's the solution; a TRANSCON merger resulting in a doupoly, something else?
No. And in particular because I do not believe the STB would approve it, assuming that DOJ didn't step in first of course (which I am certain they would). Capturing more regional traffic currently lost to trucks is probably the "next great frontier" for the post-Staggers era.
 #1345509  by rr503
 
But that would require either truck-ish travel times, or bargain prices, neither of which I see happening.
I assume you mean intermodal?
 #1345522  by Cowford
 
Mr Norman, I've been called a lot of things on rr.net; I think this is the first time "optimist" has been used! :-D

The railroads are facing a lot of headwinds right now. Coal has become a four-letter word and, while no-one expected the CBR surge to last more than 5-10 years, the decline in crude is not well-timed. Intermodal will continue to show resiliency for three reasons: People will continue to buy stuff, trucking is not without its own headwinds, and railroads will focus more energy on evolving the intermodal network... if for no other reason than that it's a commercial imperative.
Last edited by Cowford on Tue Aug 25, 2015 12:30 pm, edited 1 time in total.
 #1345600  by gokeefe
 
Cowford wrote:Intermodal will continue to show resiliency for three reasons: People will continue to buy stuff, trucking is not without its own headwinds, and railroads will focus more energy on evolving the intermodal network... if for no other reason than that it's a commercial imperative.
My feelings exactly. That this is coming from someone with a great deal more knowledge of this than me is heartening.
 #1345619  by Gilbert B Norman
 
While of course no commodity is as "competition proof" as coal, Intermodal will continue as an important traffic source.The simple fact is that every time I see a 100 car "double stack" pass my house on BNSF, I think to myself, "that's 200 truck drivers our workforce simply hasn't got"
 #1346149  by Marnos
 
gokeefe wrote:Author Matt King posting on Seeking Alpha has a number of well written articles regarding the Bakken:

This one is provided in part here for general context:
Many people wonder how much oil is in The Bakken and if it is a hoax. Many people write about the bright prospects, the novice geology terms, and the companies who are in it. But, many people have it wrong. In this article, I would like to focus on the facts, the oil production potential of the Bakken and what it means for the future of oil production.

The Bakken is not 200,000 square miles as some would have you believe. It is closer to 20,000 square miles. The Three Forks formation, which is similar to the bakken and produces oil, underlies the entire bakken area and then some. Currently, wells are drilled on 640 to 1280 acre spacing units. That translates to 1 spacing unit 1 square mile to 2 square miles long. Initially, to protect the lease on that unit, an oil company will need to hold that spacing unit by a producing well.

Each well that is drilled is thought to have approximately 500,000 barrels of recoverable oil with an initial production somewhere close to 1000 barrels per day. After only a few years, this production quickly tapers off to under 200 barrels per day and eventually to zero after about 25 years.

Development of The Bakken/Three Forks will eventually encompass up to eight wells drilled per 1280 acre spacing unit. That equates to 8 wells per 2 square miles, or the potential for 80,000 well sites if both the three forks and bakken are present over the entire 20,000 square miles. Harold Hamm of Continental Resources predicts somewhere around 50,000 wells will be drilled over the next two decades, and this is how: with 1280 acre spacing units utilizing mutli pad drilling.

Each oil rig in the Bakken drills approximately one well per month. The rig count is at 204 which equates to 204 new wells being drilled per month or roughly just over 2200 wells per year. Granted these wells come on strong, let's only assume each well adds 100 bbl/day incremental production. In that respect, ND should be able to increase its output, albeit increasing at a declining rate, by about 200,000 bbl/day per year. ND currently produces around 450,000 bbl/day and will soon overtake California as the number three oil producing State. Of course, weather, input shortages, regulated hydraulic fracturing, and crude takeaway options can impact that number significantly. If current assumptions hold true, the drilling will last up to 30 years in the Bakken and Three Forks. That being said, investments in related Bakken companies will continue to be strong unless the EPA halts fracturing or the price of oil falls below $55 per barrel.
This post makes me all sentimental and stuff lol

I agree that back in 2011 it took about a month for a drilling rig to punch a hole. However these days, it takes about a week. The technology and techniques have improved that much that fast within the industry.

Unsure how this whole thing is going to play out. I have yet to meet an oil and gas industry expert whose predictions have been close to right.

In 2011, the old hands told me that if oil hits $75 a barrel, start making back-up plans because laysoffs are imminent. The industry didn't even flinch when it hit that mark last fall. It wasn't until things dropped to $50 a barrel that things really started to slow down and things momentarily started picking back up when it rose to $65.

We are STILL breaking production records despite the fact that it dropped into the $30's this week and despite the fact that over 150,000 people have been laid off in the oil and gas industry since Janurary !!!

There really is no predicting the whims of O&G business right now. All them tankers coming out of North Dakota will stop coming eventually. May take 20 years might take 5, but eventually they will succeed in getting it all out of the ground AND it will be on to the next boom town/boom state.
 #1346543  by gokeefe
 
Sure, on to the next one. Just imagine how long it will take before that runs out. Probably not in most of our lifetimes.
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