Moderator: Jeff Smith
Cowford wrote:Intermodal CAGR has averaged about 2.5% over the last 10 years; about 5% over the last five years. I always marvel at your optimism!Thanks!
A multi-car oil train derailment Friday in the Columbia River Gorge near Mosier sent up a massive plume of black smoke and stoked long-standing fears about the risks of hauling crude oil through one of the Pacific Northwest's most renowned landmarks.I was hoping that the temporary lull in oil traffic was giving the industry a back to the drawing board mentality and were identifying weaknesses in the handling oil safely yet efficiently. I sincerely hope this incident was a "one off" and from it comes a learning experience.
Eleven cars from a 96-car Union Pacific train derailed west of the small city about 12:20 p.m. At least one car caught on fire and released oil, but no one was injured, said railroad spokesman Aaron Hunt.
The train originated in New Town, North Dakota, and was moving Bakken crude to the U.S. Oil & Refinery Co. refinery in Tacoma, said company spokeswoman Marcia Nielsen.
The oil-train boom is waning almost as quickly as it began.We don't need this; but then after Megantic and all the others that got on to Page 1, as well as after the capital has been committed, pipelines can move the stuff cheaper and safer, I can't be too surprised.
Rail became a major way to move crude after companies began unlocking new bounties of oil from shale formations, with volumes rising from almost nothing in 2009 to more than one million barrels a day by 2014, according to the U.S. Energy Information Administration.
But those numbers began falling after oil prices started tumbling two years ago, and aren’t projected to recover anytime soon. In April, just 430,000 barrels of oil rode the rails each day, according to the latest federal figures.
Some of the decline came from a drop in U.S. oil production, but oil and rail executives say the drop-off may be permanent. “At least some portion, and it could be a pretty large portion,” of the rail business won’t return, said Union Pacific Corp. Chief Executive Lance Fritz.
More pipelines have begun reaching North Dakota and other shale regions, giving producers a cheaper way to move their oil to market.
Also, a string of fiery crude-freight-train derailments—including one in Lac Mégantic, Quebec, that killed 47 people in 2013—have prompted a host of new and expensive regulations, and fueled opposition that has helped delay major rail projects on the West Coast, where a dearth of pipelines makes rail useful. Regulators have mandated new safer tank cars, and older tank cars are being phased out—adding to future costs for transporting oil.
“Communities around this state have awoken,” said Oregon’s governor, Kate Brown, a Democrat. Washington’s governor, Jay Inslee, who is also a Democrat, said he thinks that all oil transit should be halted until more stringent track inspection rules can be put into place. “Can it be transported into the Pacific Northwest safely?” he said. “That answer now is no.”Sooner or later, the "Greenies" are going to confront a pipeline that went BOOM or an underground leak undetected until some kid comes home smothered in oil from playing in the backyard - or worse, a public park.
The volume of oil being shipped by rail across most of the rest of the nation has plummeted, as low oil prices and more pipeline capacity have reduced the need for trains. The number of rail cars carrying petroleum is down about 40 percent from the peak in 2014, according to the Association of American Railroads
Gilbert B Norman wrote:Lest we note, that pipelines come with heavy capital costs, and as we have learned (and may I say I predicted) that various Sheiks of Araby still have enough muscle in the marketplace, as well as much lower production costs, to set the world price of crude. Unlike 1973 and 1979, where they sought and succeeded to limit the supply of crude to raise the price, they now seek to flood the market to drive the competition, i.e. Bakken, out of business. I'm sure they are delighted to see that railroads are being questioned about handling crude safely, as Bakken is presently "underserved" by pipeline.Some thoughts about the market as it stands right now since the Saudis (and OPEC) generally have attempted to regain control of the market. First and foremost this strategy has been driven largely by desperation. The re-entry of the United States into the global markets as an oil exporter has substantially destabilized the balance of power in global oil markets. Saudi Arabia's nearly four decade monopoly as the swing producer has broken and there are numerous reasons why. Normalization of relations with Iraq and consequent increases in production there being first among these.
disclaimer: author holds long position UNP
Bakken (and shale oil generally) have also done something no one could have predicted a few years ago, their production costs have been driven down by 50% or more. This means that the "profitable" WTI price for Bakken oil is now closer to $40-$50 per barrel with some previous reports indicating that the most efficient operations were doing just fine at prices barely about $20 per barrel.Are you distinguishing between exploration/drilling and simple production breakeven? The proof of the breakeven pudding is in the eating, i.e., rig counts and crude production. Bakken rig count was ~200 two years ago. It now stands at 28. And production is down 17% from peak, and falling fast as existing well output decline.
When oil prices began to plunge two years ago due to a global glut of crude, experts predicted U.S. shale producers would be the losers of the resulting shakeout.Of great interest is the graphic within the article depicting the break even price/bbl of the oil producing regions. While of course the various Sheiks and Vladimir The Great are on top, the US is "in the game"; Canadian sand oil is not.
But the American companies that revolutionized the oil and gas business with hydraulic fracturing and horizontal drilling are surviving the carnage largely unbowed.
Though the collapse in prices caused a wave of bankruptcies, total U.S. oil production has only fallen by about 535,000 barrels a day so far this year compared with 2015, when it averaged 9.4 million barrels, according to the latest federal data.
As the oil markets ponder where production will resume when prices pick back up, one clear answer has emerged: America. Goldman Sachs forecasts the U.S. will be pumping an additional 600,000 to 700,000 barrels of oil a day by the end of next year—making up for every drop lost in the bust.
More than 60% of U.S. fuel pipelines were built before 1970, according to federal figures. Recent disruptions on Colonial Pipeline Co.’s fuel artery running up the East Coast show why some energy observers worry that this is a problem.Let's imagine the 1967 movie The Graduate. Benjamin (Dustin Hoffman) is in the pool in his diving gear. Mr. Robinson (Murray Hamilton) walks over to say his one word to Benjamin:
The pipeline, which began operating fully in 1964, was partially shut down for nearly two weeks in September. Fuel prices spiked throughout the Southeast, rising more than 20 cents a gallon in places like Atlanta