Western Railroad Discussion > Canadian tar sands oil moves by rail

There's another article on Marketwatch about the expanded use of railroads to move oil from the tar sands oil fields of Alberta to US Gulf Coast refineries. There are plans to move the sticky gooey stuff by pipeline, but the best estimate has that pipeline completion several years off.

>>t may cost $3 to $6 to move a barrel of crude through a pipeline versus $15 to move it by rail.

But that price difference vanishes if you get the oil to a destination where it fetches a far higher price — namely, to ports on the West or Gulf coasts, where crude (currently,anyway) sells for $20-$30 a barrel more. Plus, rail can adapt far more quickly to changing oil markets — in days, rather than years. Pipelines take years to permit and build, and most pipelines on this continent run north to south, whereas trains can (and do) go any direction.

http://www.marketwatch.com/story/oil-aboard-railroads-shipping-more-alberta-crude-2011-11-03?link=home_carousel

CNBC Asia had an interview last night with the high commissioner of India's northern natural gas company. He says they're lining up all the $3 Canadian and US natural gas they can move. With prices at $12 in India, it's a non brainer for them.

With the common knowledge that producers will move oil by pipeline don't look for railroads to buy tank cars and maybe the producers will not either. So, there may be a limit as to how much oil will be moved by rail and thereby hold back production.

tomstp Wrote:
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> With the common knowledge that producers will move
> oil by pipeline don't look for railroads to buy
> tank cars and maybe the producers will not either.
> So, there may be a limit as to how much oil will
> be moved by rail and thereby hold back production.

Especially since the pipeline might be permitted and built in three years. That's a very short time to recover investment costs for a new tank car.

But, it could be a nice stimulus initiative for the Canadian and US governments. The rail cars would be ready in three to six months and could be built in a lot of plants. The Canadians already do that for grain cars used by CN CP etc

The railroads don't buy tank cars anyway, except for company service. The question is whether the leasing companies (GATX, Union Tank Car, etc.) will see a sufficient return on new tank cars to build them for crude-oil service. Whether such cars would be adaptable to other cargoes if the crude traffic went away (to pipelines) would also be a factor.

toledopatch Wrote:
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> The railroads don't buy tank cars anyway, except
> for company service. The question is whether the
> leasing companies (GATX, Union Tank Car, etc.)
> will see a sufficient return on new tank cars to
> build them for crude-oil service. Whether such
> cars would be adaptable to other cargoes if the
> crude traffic went away (to pipelines) would also
> be a factor.

Couldn't they just put tanks on all those stored center beam lumber cars?.
Not saying its going to happen but a warning of boom to bust nature of business.


Bob Jordan
P.S.
This is an allegory or something like that JIC.

robj Wrote:
-------------------------------------------------------
> toledopatch Wrote:
> --------------------------------------------------
> -----
> > The railroads don't buy tank cars anyway,
> except
> > for company service. The question is whether
> the
> > leasing companies (GATX, Union Tank Car, etc.)
> > will see a sufficient return on new tank cars
> to
> > build them for crude-oil service. Whether such
> > cars would be adaptable to other cargoes if the
> > crude traffic went away (to pipelines) would
> also
> > be a factor.
>
> Couldn't they just put tanks on all those stored
> center beam lumber cars?.
> Not saying its going to happen but a warning of
> boom to bust nature of business.
>
>
> Bob Jordan
> P.S.
> This is an allegory or something like that JIC.

That would just make low capacity tank cars with a very high tare weight.
Not exactly the way to make a profit.

Would this be an application for the 'Oil Cans' style inter-connected tank cars? I don't know if there's a question of heating the oil to make it viscous or how that's done.