North Dakota Bakken Crude Oil

'We report, you decide' to the extent this NBC News segment aired Tonight represents 'slash and burn' journalism:

http://www.nbcnews.com/id/3032619/ns/NB ... s#52932179" onclick="window.open(this.href);return false;

I find it interestging that NBC 'just happened' to visit Barrington IL - one of the most affluent NW suburbs and include comments to the effect how one resident 'sleeps with one eye open'. This municipality is NIMBY in the first order, as it is located along 'the sleepy J' (also C&NW/UP) where I'm sure many a real estate broker led some getting ready to plunk down seven figures to 'don't worry about it - a train a day, if that'. Residents fought CN acquisition of the J concerned that it would become what it has - a busy through route around the congestion known as Chicago.

I do think points with regard to the DOT 111 Tank Car in the aftermath of Megantic are worthy of consideration. The question must be raised is if the MM&A train had newer versions of Tank Cars, would have that incident been more readily containable considering it was a given that the runaway train would derail.

Again; 'We report, you decide'.

First report I've seen of idle oil tank cars.
http://www.pressherald.com/news/idle-ta ... 09-14.html" onclick="window.open(this.href);return false;

YARMOUTH – Drivers who cross the Pan Am Railways tracks at the Route 115 overpass here have noticed them this summer: oil tank cars stretching as far as the eye can see.

Why are the cars there? And when will they leave?

The 100 or so cars are empty, Pan Am Railways said Thursday. They have been parked on a storage track for a month. And they're not likely to move until global oil markets change.

Yesterday @ MP 18.2, I observed a WB train of Tank Cars: so what's new?

Of interest these cars were placarded 1987 (Class 3), which comprises denatured alcohol and ethanol.

This observation has me wondering if in the aftermath of Megantic, Crude Oil, or at least that with properties such as from Bakken now being placarded 1987 rather than the more prevalent 1267.

Gilbert B Norman wrote:Yesterday @ MP 18.2, I observed a WB train of Tank Cars: so what's new?

Of interest these cars were placarded 1987 (Class 3), which comprises denatured alcohol and ethanol.

This observation has me wondering if in the aftermath of Megantic, Crude Oil, or at least that with properties such as from Bakken now being placarded 1987 rather than the more prevalent 1267.

No, what you saw was an Ethanol train. I saw four Crude Oil trains yesterday, two loads and an empty at Prescott, WI on BNSF, and one load on CP at Red Wing, MN, they were all placarded UN 1267.

This past Wednesday's New York Times had a good article addressing the various modes used to handle crude. While taking a very 'macro' view of all transportation, and does not 'editorialize' against rails in view of Megantic:

http://www.nytimes.com/2013/10/09/busin ... eries.html" onclick="window.open(this.href);return false;

Brief passage:

• THE North American shale boom has brought with it many benefits, including new jobs, cheaper electricity and the potential for energy independence.
  
  But as producers tap ever more oil and gas, they are also exposing major shortcomings in the country’s transportation system and grappling with a problem of plenty: how to move all that product to market? “The problem is transport,” said Ed Hirs, an energy economist at the University of Houston.
  
  With the glut of oil, pipelines are congested and railroads are scrambling to pick up the slack, raising concerns about hazards like the recent explosion that killed dozens in Quebec. Similarly, highways are underdeveloped for this kind of traffic, while oceangoing tankers are burdened with regulatory constraints and there is a barge shortage.......In the United States, rail shipments of crude increased to nearly 234,000 carloads in 2012 from 9,500 at the beginning of the boom in 2008, according to the Association of American Railroads. Warren E. Buffett has been a big beneficiary. This year, the railroad BNSF, which he bought in 2010, helped drive the stock price of his company Berkshire Hathaway to a record high.
  
  But North American railroad companies have been scrambling to add new track and loading terminals, as fuel companies buy more cars specially designed to carry the flammable crude..

The Times has further reporting that appeared today regarding that those shippers that were holding out for the Keystone XL to be built are starting to cast their lots with rail:

http://www.nytimes.com/2013/10/31/busin ... rails.html" onclick="window.open(this.href);return false;

Brief passage:

• http://www.nytimes.com/2013/10/31/busin ... .......The Canadians remain a few years behind producers in North Dakota, where the paucity of pipelines encouraged early oil explorers like EOG Resources to form a partnership with Burlington Northern Santa Fe to build terminals for the shipment of oil by rail to refineries across the country.
  
  Today more than three-quarters of North Dakota’s production, which also was to move on the Keystone XL pipeline, is transported by rail. The Canadian oil producers took notice.

There is mention of the Bakken fields within the article so I guess posting here is on topic.

Thanks to RAILROAD.NET member "bostontrainguy" for alerting me to this incident.

From The Globe and Mail:

The Globe and Mail wrote:A 90-car train carrying crude oil derailed and exploded in a rural area of western Alabama early on Friday, leaving 11 cars burning and potentially bolstering the push for tougher regulation of a boom in moving oil by rail.

No injuries have been reported, but 20 of the train’s cars derailed and 11 were still on fire, the train owner, Genesee & Wyoming, said in a statement. Those cars, which threw flames 100 metres into the night sky, are being left to burn down, which could take up to 24 hours.

A local official said the crude oil had originated in North Dakota, home of the booming Bakken shale patch. If so, it may have been carrying the same type of light crude oil that was on a Canadian train that derailed in the Quebec town of Lac-Mégantic this summer, killing 47 people.

Read the rest of the article at: http://www.theglobeandmail.com/report-o ... e15351149/" onclick="window.open(this.href);return false;

From The Portland Press Herald:

The Portland Press Herald wrote:Proposed new safety standards for rail cars that haul flammable liquids gained support from U.S. railroads Thursday, but it’s not yet clear whether the companies that own most of those cars will support the upgrades to prevent leaks.
. . .
U.S. railroads are supporting new safety standards for rail cars that haul flammable liquids to address flaws that can allow crude oil, ethanol and other substances to leak during accidents.
. . .
Chop Hardenbergh, a Freeport resident who publishes an industry newsletter, Atlantic Northeast Rails & Ports, speculated on Thursday that railroads might benefit from higher tanker standards because it would lower the risk of major accident and also their insurance rates.

“It helps not only public perception but potentially their bottom line,” he said. “They can’t have another Lac Megantic.”

Read the rest of the article at: http://www.pressherald.com/news/Railroa ... _cars.html" onclick="window.open(this.href);return false;

Q: What commodity is used in the hydraulic fracturing process, needs transportation with the only reasonable and practical way to handle such is rail, and if it spills, you just sweep it up?

A: Read this

This past Thursday's Wall Street Journal has an article regarding rail transport of Bakken Crude that has a 'negative' headline but yet is positive regarding shipper demand for rail transport:

http://online.wsj.com/news/articles/SB1 ... 0594400852" onclick="window.open(this.href);return false;

This negative Brief Passage appears to be one more 'roundup of the usual suspects':

• And in the wake of this summer's train derailment in Quebec that killed 47 people, some groups are vowing to stop projects that would increase the number of oil trains rumbling through communities.
  
  "The whole enterprise raises serious concerns about the heightened risk of transporting crude by rail," said Devorah Ancel, a staff attorney for the Sierra Club, an environmental advocacy group that has opposed some of the crude-by-rail projects at Washington ports.

But the article includes reporting that the refining industry wants more rail transportation including some novel rail-water movements. While of course with these rail-water routings, both BNSF and SOO/CP will enjoy favorable line hauls, UP, which has little or no access to the Bakken Fields, will be 'cut out'.

Gilbert B Norman wrote:This past Thursday's Wall Street Journal has an article regarding rail transport of Bakken Crude that has a 'negative' headline but yet is positive regarding shipper demand for rail transport:

Here is another perspective from the latest Director's Cut of the North Dakota Department of Mineral Resources:

Aug Oil 28,246,774 barrels = 911,186 barrels/day
Sep Oil 27,958,190 barrels = 931,940 barrels/day (preliminary)(NEW all-time high)
...
Aug Producing Wells = 9,475
Sep Producing Wells = 9,682 (preliminary)(NEW all-time high)
...
Aug rig count 183
Sep rig count 183
Oct rig count 183
Today’s rig count is 185 (all-time high was 218 on 5/29/2012)
Operators have indicated plans to add 5-10 rigs by year end
...
The drilling rig count was unchanged from Aug to Sep and the number of well completions rose sharply from 153 to 207, resulting in a 2% increase in oil production. However, drilling crews drilled approximately 1.5 wells for every well that completion crews put on production. Industry reports that this is a result of batch processing on multi-well pads.
...
We estimate that at the end of Sep there were about 520 wells waiting on completion
services, an increase of 90.
Crude oil take away capacity is expected to be adequate as long as rail deliveries to
coastal refineries keep growing.

Based on the comments from the Department there is absolutely no question in my mind that we will see continued volume increases of rail based crude oil transport coming from the Bakken fields. The backlog of wells awaiting completion services is an indicator of major upcoming increases in production over the course of the next 6-12 months. At the current pace the Bakken field will surpass the 1M BPD mark in early 2014 at the latest and will probably challenge the 1.1M BPD mark by the end of 2014. All of this additional production will continue to displace more Brent priced crude oil back onto the world markets. At the same time Iraqi production will continue to increase and with the recent political resolution regarding Kurdish production and export to Turkey there is potential for Iraq to add close to 500K BPD (or more) in 2014. All of this is to say nothing of what the potential is for production increases from Libya.

There are two primary dynamics here that will positively affect railroads. First the increase in petroleum tank car loads will continue to provide further support to traffic volumes. Second the decreasing price of oil will give the economy a major boost and as demand for transportation increases the railroads will be faced with a perfect storm of profits, increasing demands with decreasing energy costs and mild currency inflation which will permit price stability and exceptionally healthy margins.

Overall a very positive situation.

Bakken production is already over 1 million barrels per day (if you count Montana).

The gulf coast is awash in light crude oil mostly from the Eagle Ford formation in southern Texas. As a result, Bakken producers can get better prices on the east and west coasts.

The percentage of North Dakota oil shipped by rail will likely jump significantly in the next year as producers increasingly turn to trains to reach U.S. refineries where premium prices are fetched, the state's top oil regulator told lawmakers Thursday.

Lynn Helms, director of the Department of Mineral Resources, told the Legislature's Government Finance Committee that he expects as much as 90 percent of the state's crude will move by rail in 2014, up from about 60 percent at present.

http://bismarcktribune.com/bakken/regul ... f887a.html" onclick="window.open(this.href);return false;

Meanwhile, Canexus is building a rail terminal in Alberta which will is projected to load thirteen unit trains per week with Canadian oil sands crude by next summer. http://www.edmontonjournal.com/Canexus+ ... story.html" onclick="window.open(this.href);return false; And TransCanada is filling its southern portion of the Keystone pipeline between Cushing, OK and the gulf coast, with operation planned to begin in January. http://www.bloomberg.com/news/2013-12-1 ... south.html" onclick="window.open(this.href);return false;

jstolberg wrote:Bakken production is already over 1 million barrels per day (if you count Montana).

The gulf coast is awash in light crude oil mostly from the Eagle Ford formation in southern Texas. As a result, Bakken producers can get better prices on the east and west coasts.

The percentage of North Dakota oil shipped by rail will likely jump significantly in the next year as producers increasingly turn to trains to reach U.S. refineries where premium prices are fetched, the state's top oil regulator told lawmakers Thursday.

Lynn Helms, director of the Department of Mineral Resources, told the Legislature's Government Finance Committee that he expects as much as 90 percent of the state's crude will move by rail in 2014, up from about 60 percent at present.

http://bismarcktribune.com/bakken/regul ... f887a.html" onclick="window.open(this.href);return false;

Meanwhile, Canexus is building a rail terminal in Alberta which will is projected to load thirteen unit trains per week with Canadian oil sands crude by next summer. http://www.edmontonjournal.com/Canexus+ ... story.html" onclick="window.open(this.href);return false; And TransCanada is filling its southern portion of the Keystone pipeline between Cushing, OK and the gulf coast, with operation planned to begin in January. http://www.bloomberg.com/news/2013-12-1 ... south.html" onclick="window.open(this.href);return false;

Hopefully all of this good news will start to add up to some substantial economic growth and lower energy costs. I think we have yet to see the true full effects of all of this new production. Too many disruptions to the global oil markets and other political pressure in the Middle East. Eventually the production increases in the U.S. will fully overwhelm domestic demand and we will start to see a sustained long term shift to lower prices.

Rail unrelated, but could the US be the next member of OPEC?

http://online.wsj.com/news/articles/SB1 ... 3756212898" onclick="window.open(this.href);return false;

Brief passage:

• Exxon Mobil Corp. , the nation's largest energy producer, is calling for the U.S. to lift restrictions on exporting domestic oil that date back to the Arab oil embargo of 1973.
  
  The Irving, Texas, company's public support for crude exports comes as it forecasts decades of abundant supplies of petroleum in the U.S. and elsewhere as well as increasing global demand for oil, according to its annual energy outlook set to be released on Thursday.
  
  "We are not dealing with an era of scarcity, we are dealing with a situation of abundance," Ken Cohen, Exxon's vice president of public and government affairs, said in an interview. "We need to rethink the regulatory scheme and the statutory scheme on the books."
  
  By 2015, energy companies will tap more oil in North America from dense layers of rock alone than the current output of members of the Organization of the Petroleum Exporting Countries except Saudi Arabia, Exxon projects.

Wow, has the shoe found itself on to the other foot!!!

Gilbert B Norman wrote:Rail unrelated, but could the US be the next member of OPEC?

I doubt the United States would formally join OPEC but, yes, I think it is possible that we could become a net exporter of crude or even end crude imports entirely from non-NAFTA countries. I'm under the impression that some imports of Mexican crude occur by pipeline so these seem unlikely to end.

I also think the U.S. oil companies would never want for us to join OPEC as it would reduce their market leverage. I think they have every intention of putting as much oil on the market as it can bear. Sounds like the high roller days in the Middle East states are about to come to an abrupt end. That's probably a bad thing for stability in that part of the world, especially for the Gulf States.