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Western Railroad Discussion > Rail served crude oil terminals drawing buyers


Date: 12/05/12 06:34
Rail served crude oil terminals drawing buyers
Author: Lackawanna484

US and Canadian oil producers have been thwarted by limited pipeline capacity, so rail is increasingly getting the call to haul oil. The existing pipeline capacity is inadequate to handle all the demands placed on it. One pipe company reported it was able to take just 35% of requested reservations for oil transfer.

News release this morning:

>> HOUSTON--(BUSINESS WIRE)-- Plains All American Pipeline, L.P. (PAA) (NYSE: PAA), announced today that it has agreed to acquire four operating crude oil rail terminals, one terminal under development and various contractual arrangements from U.S. Development Group (USD) for approximately $500 million. The transaction received early termination of the required waiting period under the Hart-Scott-Rodino Act and is expected to close before the end of this year.

The assets to be acquired include three crude oil rail loading terminals located in the Eagle Ford, Bakken and Niobrara producing regions with an aggregate daily loading capacity of approximately 85,000 barrels per day, a rail unloading terminal at St. James, Louisiana with capacity of approximately 140,000 barrels per day and a project to construct a crude oil unloading terminal near Bakersfield, California.

more:

http://seekingalpha.com/news-article/4986021-plains-all-american-pipeline-to-acquire-crude-oil-rail-terminals-from-u-s-development-group



Date: 12/05/12 09:29
Re: Rail served crude oil terminals drawing buyers
Author: funnelfan

It's amazing how quick railroads were able to jump on this traffic. Outside of a few isolated examples like SP's TankTrain, unit oil trains were only known from the era of World War 2. Even a few short years ago, the idea of unit crude oil trains running all over the nation seemed implausible. But now I sitting here in Cheney seeing several a week pass by on the BNSF, and I'm not even home all that much (mostly to sleep between trips on our shortline).

Ted Curphey
Cheney, WA



Date: 12/05/12 10:09
Re: Rail served crude oil terminals drawing buyers
Author: Lackawanna484

funnelfan Wrote:
-------------------------------------------------------
> It's amazing how quick railroads were able to jump
> on this traffic. Outside of a few isolated
> examples like SP's TankTrain, unit oil trains were
> only known from the era of World War 2. Even a few
> short years ago, the idea of unit crude oil trains
> running all over the nation seemed implausible.
> But now I sitting here in Cheney seeing several a
> week pass by on the BNSF, and I'm not even home
> all that much (mostly to sleep between trips on
> our shortline).


I think the ethanol business ginned up the railroads for the potential of huge volumes of unit trains carrying petroleum products. I suspect, but couldn't prove, that the rapid decline in segments of the ethanol business freed up hundreds of tank cars at just the right moment. Thousands of ethanol cars became surplus / returned to leasing companies at about the same time the crude producers started screaming for relief.



Date: 12/05/12 10:26
Re: Rail served crude oil terminals drawing buyers
Author: bradleymckay

Lackawanna484 Wrote:
-------------------------------------------------------
>
> I think the ethanol business ginned up the
> railroads for the potential of huge volumes of
> unit trains carrying petroleum products. I
> suspect, but couldn't prove, that the rapid
> decline in segments of the ethanol business freed
> up hundreds of tank cars at just the right moment.
> Thousands of ethanol cars became surplus /
> returned to leasing companies at about the same
> time the crude producers started screaming for
> relief.

American ethanol exports are down and imports are up, thanks mostly to the drought. Exports reached their highest level ever in 2011, but have declined significantly this year. As far as I know much of it, for export, was sent via unit train to east coast ports (although I can't seem to find that exact info right now). This in turn has freed up alot of tank cars for crude oil delivery.




Allen



Edited 3 time(s). Last edit at 12/05/12 16:17 by bradleymckay.



Date: 12/05/12 12:06
Re: Rail served crude oil terminals drawing buyers
Author: Lackawanna484

bradleymckay Wrote:
-------------------------------------------------------
> (snip)
> American ethanol exports are down and imports are
> up, thanks mostly to the drought. Exports reached
> their highest level in 2011, and have declined
> significantly this year. As far as I know much of
> it was sent via unit train to east coast ports
> (although I can't seem to find that exact info
> right now). This in turn has freed up alot of
> tank cars for crude oil delivery.
>
>
>
>
> Allen

Thank you.

I thought there was a close relationship between ethanol shipments by rail being down, and crude by rail being way up.



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