"Irving Oil Shifts From Bakken to Brent".

...by Chester Dawson and Carolyn King. Wall St. Journal, Friday August 21.

Thanks for posting! If you search for that exact headline on Google, you can follow the top hit link and read the entire article for free.

JAJ

Irving is a true master hardballer at playing one thing off against the other to maximize profits. The MMA disaster burned them but good, so its off to the supertankers now. Seduced by cheap west African and Saudi crude it is bye bye CBR. I guess the new CMQ management was prescient when stating their business model did not include CBR. The alleged Saudi strategy to flood the crude market to screw the Russian oil economy, for fooling around with Ukraine, and financially bust out the US fracking revolution is going full blast however the Bakken is still pumping full blast, Russia is pumping full blast along with every other oil producing nation. When somebody finally blinks we may see 99 cent a gallon gasoline.
The war plagued madhouse formally known as the middle east region is teetering and banking on a steady supply of Saudi crude is a shaky bet. One coup or the Yemeni civil war pushes into Saudi oil fields proper and Irving true to form will probably restart Bakken CBR. Irving's problem is they only rely on CN at this juncture and CN charges big bucks for the service. CN does not yield on rates and like the other big boys UP,BNSF,NS,CSX and CP have a take it or leave it attitude. Captive shippers like power stations, large chemical plants and oil refineries have been chafing at the bit for many years over the Big Six's unregulated monopoly and their high freight rates. Deals like this one usually play out over a period of time and the Big Six and in this case CN sit back and know that sooner or later Irving will come crawling back and if they don't so what. There is nothing in the world that can match a major railroad when it comes to arrogance. LOL

The fracking revolution isnt going to end because of low oil prices. The horse has left the barn. The Saudis and others might have thought that flooding the market with oil will bring the fracking house down. They are used to competing with large nationalized and international oil companies....however, fracking is more similar to silicon valley than to Exxon. These private companies think long term and mutate constantly to meet new challenges. Certainly some companies will go bust, but will be absorbed by stronger ones and at a bargain cost. The market simply gets repriced and at a lower basis. They say some Bakken drillers can still make a profit at $35 a barrel. There are new technologies that allow increased production from old wells. Competition will drive oil drilling costs down. They say the oil glut will be with us quite a while. However, it does appear Canadian oil shale, which is expensive to mine and refine, is taking it on the chin. I have read this is one reason the Canadian dollar is falling.

I agree. Saw Trilby Lundberg owner of the oil and gas newsletter The Lundberg Report on CNBC. She believed that no new wells were coming on line in North Dakota, for the time being, but the current wells were going great guns. She stated the Russki's were pumping like mad, she also hinted the Saudi's were informally asked to cool it ( by who ? ) and said no. However she thinks $ 42-45 a barrel maybe the bottom due to the glut and the cooling of the Chinese and the world economy.

Zeke wrote:Irving is a true master hardballer at playing one thing off against the other to maximize profits. The MMA disaster burned them but good, so its off to the supertankers now. Seduced by cheap west African and Saudi crude it is bye bye CBR. I guess the new CMQ management was prescient when stating their business model did not include CBR. The alleged Saudi strategy to flood the crude market to screw the Russian oil economy, for fooling around with Ukraine, and financially bust out the US fracking revolution is going full blast however the Bakken is still pumping full blast, Russia is pumping full blast along with every other oil producing nation. When somebody finally blinks we may see 99 cent a gallon gasoline.
The war plagued madhouse formally known as the middle east region is teetering and banking on a steady supply of Saudi crude is a shaky bet. One coup or the Yemeni civil war pushes into Saudi oil fields proper and Irving true to form will probably restart Bakken CBR. Irving's problem is they only rely on CN at this juncture and CN charges big bucks for the service. CN does not yield on rates and like the other big boys UP,BNSF,NS,CSX and CP have a take it or leave it attitude. Captive shippers like power stations, large chemical plants and oil refineries have been chafing at the bit for many years over the Big Six's unregulated monopoly and their high freight rates. Deals like this one usually play out over a period of time and the Big Six and in this case CN sit back and know that sooner or later Irving will come crawling back and if they don't so what. There is nothing in the world that can match a major railroad when it comes to arrogance. LOL

Maybe Irving should have purchased the bankrupt MM&A on the cheap just as Fortress did and fixed it up to ultimately run oil trains on it without being so captive to CN, pitting the both CN and CP to get the best rate with CSX and PAR supplying a third route.

Irving's problem is they only rely on CN at this juncture...

That is incorrect. Irving moves inbound crude over CP/Port of Albany. So much for monopoly status.

jjoyce1, you are welcome. If I knew how to post a link, I would have.
Zeke, I would like to learn about railroad pricing strategies/charges, you seem to know something of that and was wondering if you could point me in the direction of that information.
gp111, in a recent edition of the WSJ, not last Fridays as I looked through it before I recycled it, there was a lengthy article on Canadian shale production should you be interested in it.
And to think I thought no one would be interested in my original post!

I thought the CP/Albany deal, if you mean the rail to barge transfer, was finished in January 2015. If not please explain. I assume at this juncture, late August 2015, there is no CBR moving over CN or any other rail route to Irving and ocean going tankers are supplying Brent to the refinery.

That may indeed be the case (the water portion was actually handled by small tankers)... I took from your post you were implying that CN held a monopolistic position. (Oil could also move rail direct over PAR/NBSR.)

We also have a strong dollar right now so imports are attractive (And exports are not)

From reading interviews of Irving execs,they say the end game is a pipeline. I don't think it will happen anytime in the next five years or so due to a 2015 C 12 billion dollar cost. The greenies and nimbys are already cranking up the sturm and drang against any movement via pipeline or rail. Irving also stated that they have no desire to operate CBR through Maine. Given the 75 million dollar Megantic fine Irving coughed up and the sorry state of the PAR route it would be a safe bet they are right barring some world upset affecting Brent. Hence my belief CN is the only ultra professional rail operator Irving would use if CBR Bakken became a reality again and my monopoly observations of the Big Six and in this case CN, sitting in the cat bird seat, positioned to make some big money if/when the traffic returns. Irving executives did state most of the crude now arrives at the refinery by ship so it is possible the CP Port of Albany CBR transfer and movement by water option is at present perfectly viable if Bakken traffic returns.

FWIW looks like the last Buckeye Partners(Port of Albany)-Saint John Crude tanker shipment was 6/22/15. As far as I can tell, CN's last U700 was 7/24/15. CN's were a weekly occurrence but have now trailed off.

CN was the last railroad to get involved with CBR to Saint John for a multitude of reasons. Rumor was the cheapest routing was CP to Buckeye and tanker to Saint John as opposed to any all rail route. IF any road ever had a monopoly on this traffic it was CP through its MMA connection initially and now its direct route to Buckeye. I was also under the impression that the Buckeye rail-tanker operations was under a long term contract as opposed to the seemingly random CN trains.

Given the current economic situation in the world and the strong US dollar, no doubt they are shifting away from Bakken. However, they still have a part in an Alberta crude by rail loading facility (assuming this hasn't changed as I've heard nothing) and also it is very likely that CBR traffic will rebound in 2016/2017. So if I was Irving and I was in the short-term switching away from Bakken, I would 100 percent use it as a PR stunt. I mean, use it to distance yourself from crude oil trains and Bakken shale oil. Just wait a few months/years and they'll be back. They still have plans to export crude as well from Alberta and build a pipeline.


Also check out this choice worded letter, especially the last part about crude oil:
http://www.cmqrailway.com/news/general/000009" onclick="window.open(this.href);return false;

Very interesting. I was under the impression there was some carping in Albany about the oil traffic and had read somewhere it had been shut down in January 2015. Mr fogg I concede the point and was curious if you know how CP routed the Bakken to Albany, over the Southern Tier or across Canada to the D and H from Rouses point and down to Albany ?