Western Railroad Discussion > Bakken crude oil to the Gulf refineries / ports

The flow of oil from the Bakken oil fields in North Dakota to the Gulf states refineries usually begins with a crude by rail train. Some go all the way south to St James LA, while other shipments are trans-loaded to pipe or barge. RBN Energy reports that we're now days away from a pipeline taking much of the oil all the way. That's the Dakota Access Pipeline, which has been in the news.

https://rbnenergy.com/we-can-work-it-out-moving-bakken-and-other-light-sweet-crude-from-the-gulf-to-asia


At the same time, US exporters are sending more crude to Asia, specifically Bakken crude to China. A VLCC (Very Large Crude Carrier) sailed with Bakken crude recently. Using the new Panama Canal. If I did the math correctly, each ship carries about 2,700 rail car equivalents or about a month's worth of daily unit trains.

The Chinese are undertaking a huge pivot on their energy consumption. In recent months, they've suspended work on more than 20 coal fired electric plants, and are converting others to natural gas. They've also signed several spot agreements to purchase US LNG, Cheniere has already originated shipments. Good for US gas exporters, bad for US coal exporters. Also bad for Philippines and Vietnam as the Chinese drill for gas in disputed South China Sea waters.


I'm now re-reading Russ Braziel's The Domino Effect, a guide to understanding the interplay crude, natural gas, coal, gas liquids, some solar, etc. Absolutely fascinating book. I highly recommend it.

Paul: In regards to coal in China its a bit more complicated than that. Just like China has been building shopping centers that still sit empty they have built or planned to build more coal fired power plants that are really not needed because electric power demand is plateauing. They did this to keep people working when their fast going economy suddenly slowed. Might not make sense to us but it does to them.

With power demand plateauing I have to question their interest in so much LNG. They are world class when it comes to media spin. China has been very slow to move away from using high sulfur coal and everybody seems shocked by it. They shouldn't be. The high sulfur coal deposits are closest to the major cities while their largest low sulfur coal deposits are way out near the Mongolian border. And because they like to keep people working they continue to mine high sulfur coal, which is the coal that when burned continues to choke some of the major cities.

Most likely to happen is a faster move away from using high sulfur coal and conversion of several mostly newer plants, nearest the major cities along the coast, to using LNG. It's not likely to effect the low sulfur coal market very much...Australia is China's #1 met and thermal coal supplier and they seem unconcerned, especially when you consider just how many coal fired power plants there are in China. China has indicated continued interest in getting more low sulfur coal from the Powder River Basin. There are probably at least a dozen reasons why...



Allen



Edited 1 time(s). Last edit at 05/16/17 08:13 by bradleymckay.

Are you sure that VLCC went Via the the new Panama Canal? Most don't along with Valemax iron Ore carriers.

trkinsptr Wrote:
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> Are you sure that VLCC went Via the the new Panama
> Canal? Most don't along with Valemax iron Ore
> carriers.


That's a good question. I thought I read that the canal was used, but I don't see that in the article on re-read

WAY too big for the canals, either the old one or the new one.

Unless something changed, I think there was prohibitions on the export of US produced Crude Oil and LNG.

Ted Curphey
Ontario, OR

funnelfan Wrote:
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> Unless something changed, I think there was
> prohibitions on the export of US produced Crude
> Oil and LNG.

Something did change. The Commerce Department reclassified condensate, a lightly processed crude as "processed" which allows it to be exported. As gasoline, lubricants, diesel, kerosene etc have been for years.

President Obama signed legislation which allowed export of actual crude and LNG in December of 2015 or January of 2016, after the Congress passed a bill allowing same.


Cheniere has first mover advantage on the LNG exports to China, etc, but Shell is close behind with export facilities under construction