• November 21, 2014

Trains, not pipelines, channel new U.S. oil boom

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Posted: Saturday, August 3, 2013 4:30 am | Updated: 11:57 am, Mon Aug 19, 2013.

DELAWARE CITY, Del. — Who needs a pipeline when you have a railroad?

While Republicans in Congress accuse President Barack Obama of killing American jobs by delaying a decision on the controversial Keystone XL pipeline, the Delaware City refinery, 100 miles northeast of Washington, never needed it.

No pipeline runs from the booming Bakken oil-producing region of North Dakota to Delaware City. No pipeline stretches to the Tesoro refinery at Anacortes, Wash.

Rather, existing oil pipelines generally run north-south, not east-west. But railroads lead to Delaware City and Anacortes, and practically everywhere else in the country.

From stopgap to go-to

Until last month’s deadly derailment of a crude-oil train in Quebec, pipelines dominated the debate about moving oil. But rail shipments of North American crude oil already have matched what Keystone XL was proposed to carry, and more is on the way. What started as a stopgap has become the go-to for transporting crude.

“A big part of the popularity of rail is that the president can’t veto it,” said Eric Smith, associate director of the Tulane University Energy Institute.

Environmental and community groups may find that they have less power to stop a train than to stall a pipeline.

Pipelines can take years to approve and can only move a product from point A to point B. Rail cars, by contrast, can be deployed quickly and can go almost anywhere. Oil producers and refiners turned to rail because they didn’t have enough pipelines. They discovered they liked it.

“They always thought of pipelines,” said Philip Verleger, an energy economist and a visiting fellow at the Peterson Institute for International Economics, a Washington think tank. “Once they demonstrated it can be done (by rail), they said, ‘Oh, why didn’t we think of it?’”

In March, 71 percent of North Dakota crude moved by rail vs. 20 percent by pipeline, according to state data. The rail shipments, and new hydraulic fracturing technology, have helped North Dakota overtake Alaska as the nation’s No. 2 oil producer. Texas is No. 1.

“It’s not for lack of pipelines that producers in North Dakota are shipping by rail,” said Anthony Swift, an attorney on energy issues at the Natural Resources Defense Council, an environmental group. “Producers are choosing to move by rail.”

Keystone was intended to transport both light crude from the hydraulic fracturing, or fracking, of shale formations in the Bakken region in North Dakota, as well as heavy crude extracted from the tar sands in western Canada.

Pipeline opposition

Environmentalists oppose Keystone because it would tap the western Canada tar sands, which are more carbon intensive and involve carving up boreal forests in a manner that resembles the surface mining of coal.

While Obama still must decide whether to approve the Keystone XL project, the oil can flow by rail without his signature. In addition to Bakken oil, a small but growing volume of Canadian tar sands crude is moving by rail.

Unlike a pipeline, rail can reach virtually everywhere, and not just refineries. The port commission in Vancouver, Wash., has approved a terminal that could receive as many as four trains a day. Tanker ships would take the oil to refineries in the Pacific Northwest. Yorktown, Va., is set to open a terminal later this year that would receive two trains a day. The oil would be shipped to refineries in the Mid-Atlantic via tanker ship or pipeline. In June, Kinder Morgan canceled plans for an oil pipeline from Texas to California. The refiners were satisfied with receiving crude by rail.

It’s more expensive to ship crude by rail than by pipeline, but Verleger said the flexibility is worth the cost.

In 2008, the largest U.S. railroads shipped 9,500 carloads of crude oil. In 2012, that number had increased to 233,000. That’s enough to make more than 300 million gallons of gasoline, about what U.S. drivers use each day. Manufacturers of railroad tank cars can’t keep up: They face a 2 -year backlog.

While the oil boom boosted the fortunes of many communities, the prospect of additional trains bearing hazardous cargo in densely populated areas has rattled some nerves.

At least 47 people were killed in Lac-Megantic, Quebec, on July 6, when an unmanned crude oil train rolled down a hill into the center of town. Although the cause of the derailment and subsequent explosions that leveled most of the city’s downtown won’t be known until Canadian authorities finish their investigation, the fiery wreck left many wondering if there was something inherently unsafe about transporting crude by rail.

Some Keystone XL supporters pointed to the Quebec accident as evidence that pipelines are safer, although pipeline spills tend to be larger than rail spills, according to the Pipeline and Hazardous Materials Safety Administration.

Swift said that both rail and pipelines have safety problems, and that regulators need to address both to catch up with the ever-increasing volume.

“A tragic disaster moving crude by rail,” he said, “doesn’t make pipelines any safer.”

© 2014 McClatchy Washington Bureau. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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3 comments:

  • Smithjr38 posted at 9:57 am on Sat, Aug 10, 2013.

    Smithjr38 Posts: 114

    While that is good to know information about the Rail Roads , But I am afraid that now its part in Oil will now make the Rail Roads a target of the evil curse the USA Obama Administration.
    As they like Joseph Stalin want to destroy the USA just as stalin destroyed the Great Bead basket of Russian where over regulation caused millions to starve to death on the once great farm lands of Russia. All because Stalin or Obama wants to God D** the USA just as Obama used to say in Church. while praying to Stalin.

     
  • Alvin posted at 7:51 am on Wed, Aug 7, 2013.

    Alvin Posts: 220

    Oil has been the boondoggle of the U.S. since 1974. At that time, crude oil was selling for around $3.50/barrel. Since then it has been one fiasco after another. The U.S. has been making strides to increase domestic production, but with the domestic production increase, there has not been a corresponding drop in gasoline prices nor diesel prices. With the increase in domestic production, there has been a corresponding export of finished products such as diesel. It's easier to export diesel where the marketing standards are less severe than here in the U.S. so diesel gets exported and the cost of stateside products remains high.

    With the XL pipeline, The same case could be made. The influx of Canadian crude could be made. With the extra 700,000 barrels of crude, the gulf coast refinery's would just increase their exports of finished products, gasoline and diesel, while maintaining the market in this country. I don't think there would be little if any advantage to the U.S. customer. Let's face it, I feel the market will never gain any significant drop here in the U.S. It just seems to matter whose pockets will receive the money.

     
  • Eliza posted at 9:50 pm on Mon, Aug 5, 2013.

    Eliza Posts: 859

    But would this mean Warren Buffett would benefit from carrying oil on his railway line ?
    isn't he a good friend plus a main advisor of the presidents ?
    Wouldn't that be along the lines of being too close to the oval office to be a benefactor of such a beneficial deal?
    -----------------------------


    Buffett’s Burlington Northern Among Pipeline Winners

    By Jim Efstathiou Jr. - Jan 23, 2012 (Corrects location of Canadian National in 18th paragraph.)

    Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the
    Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.

    With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department.

    “Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview.
    If Keystone XL “doesn’t happen, we’re here to haul.”

    The State Department denied TransCanada a permit on Jan. 18, saying there was not enough time to study the proposal by Feb. 21, a deadline Congress imposed on President Barack Obama. Calgary-based TransCanada has said it intends to re-apply with a route that avoids an environmentally sensitive region of Nebraska, something the Obama administration encouraged.

    The rail option, though costlier, would lessen the environmental impact, such as a loss of wetlands and agricultural productivity, compared to the pipeline, according to the State Department analysis. Greenhouse gas emissions, however, would be worse.

    If completed, Keystone XL would deliver 700,000 barrels a day of crude from Alberta’s oil sands to refineries along the Gulf of Mexico, crossing 1,661 miles (2,673-kilometers) over Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.