Eastern Railroad Discussion > Canadian oil sands crude to move by pipeline and barge.

This has been coming for a long time. One of my clients is also gearing up to move crude that will be sent by pipeline and rail from Canada and the Dakotas to marine terminals on the Great Lakes, and the Mississippi River. It will be barged to Baton Rouge in river tank barges and trans-shipped to be moved by large ocean barges to the east coast, and to Gulf Coast refineries; as well as by ocean barge (from March to December)from the Great Lakes out to East Coast refineries via the St. Lawrence and the Atlantic coast. All of the product will move in double-hulled barges to prevent spills.

I'm guessing the reason is a lower transport cost and larger quantities can be moved at a time using less fuel/energy than an all-rail routing.

Bob

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ACL to begin transporting Canadian crude by inland barge to Gulf Coast for oil sands company MEG Energy

23 December 2012

American Commercial Lines (ACL) will begin transporting crude oil by barge on the US inland waterways for MEG Energy (US) Inc. (MEG Energy), a subsidiary of the Canadian oil sands company MEG Energy Corp. Crude oil will arrive primarily via pipeline and will be transferred to barges at storage terminals located on the inland waterways for transport by ACL to the Gulf Coast.

ACL is dedicating new tank barges built by its manufacturing division Jeffboat into service for MEG Energy, as well as newly repowered and refurbished towboats.

One tank barge has the cargo capacity of 46 rail cars or 144 trucks, ACL said (about 27,600 barrels). Viewed another way, two tank barges have almost the capacity of a unit train of 100 tank cars (earlier post). In 2011, ACL launched the first in a series of tanker barges to be constructed at its Jeffboat manufacturing facility through 2012 to replace retiring fleet capacity.

The first of the barges, launched on May 2012, was a clean service tanker with a capacity of 30,000 barrels. It included a redesigned stainless steel piping system and a new radial rake design that will also be found on the tankers the company plans to build through the end of 2013.

In April 2012, ACL purchased eight 20,000 barrel capacity tank barges from SeaRiver Maritime Inc., a subsidiary of Exxon Mobil Corporation, to expand its fleet of 325 tank barges to meet mid-range demands.

American Commercial Lines Inc. is an integrated marine transportation service company owned by Platinum Equity and operating in the United States Jones Act trades. The Company is headquartered in Jeffersonville, IN, has approximately 2,200 employees and operates a fleet of approximately 120 tow boats and 2,300 barges. The Company is the direct parent of Commercial Barge Line Company.

MEG Energy is a Canadian oil sands company focused on in situ development and production. MEG also owns interests in two key midstream assets including Access Pipeline and Stonefell Terminal. Stonefell Terminal is a planned 900,000 barrel storage facility located near Edmonton. The partially-constructed facility is expected to be complete in 2013.

On completion, Stonefell will be tied into the Access Pipeline with planned connections to other regional pipeline and rail transportation infrastructure.

No doubt some of this will happen. But there is also a time element. Crude trains from ND to DE are taking 7-10 days one way, not fast for sure. But river barges move at 5mph and ocean barges about 12 mph, and it is a long way around the Canadian Provinces to go from a Lakehead terminal to the East Coast where the refineries are, essentially northern NJ and up the Del River. ATB's built to fit the St Lawrence Seaway might do the trick, but time is still an issue. Barge companies are just as conscious of their fuel costs as railroads.

In other posts I have questioned why Tank Train Tech is not used, and it has been pointed out that they need specialized facilities, which is true. However they few Tank-Train moves that have survived are done by each train having several blocks. I think the tech has a max of 12-16 cars per cut, that was the max that could be handled from one connection. Use the new 286k tank cars designed for maximum barrel capcy for the ND or Alberta crude and each block is equivalent of a barge. Then a train if 5-10 blocks of Tank-Train cars couold reach multiple destinations along the way. Most USA refineries are rather small, esp in the Midwest.

Their Access Pipeline System gets them from the Oil Sands to Edmonton, at that point they are dependent on somebody else to move their product further. There is a lot of talk but not much action so far to get pipelines further. It will also be interesting to see how the Seaway and coastwise idea works out within the framework of the Jones Act. Look for Bakken Oil movements to the Gulf Coast to slow considerably by next summer, displaced by a combination of Eagle Ford and Permian Basin crudes. For Canadian crudes the Gulf Coast will still look good if they can solve their transportation problems.

SOO6617 Wrote:
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> Their Access Pipeline System gets them from the
> Oil Sands to Edmonton, at that point they are
> dependent on somebody else to move their product
> further. There is a lot of talk but not much
> action so far to get pipelines further. It will
> also be interesting to see how the Seaway and
> coastwise idea works out within the framework of
> the Jones Act. Look for Bakken Oil movements to
> the Gulf Coast to slow considerably by next
> summer, displaced by a combination of Eagle Ford
> and Permian Basin crudes. For Canadian crudes the
> Gulf Coast will still look good if they can solve
> their transportation problems.

Yes.

The part that amazes me is that there's so much emphasis on transporting the crude. Build a refinery out there, and transport gasoline. Keep the highly paid refinery jobs in Alberta, North Dakota, etc.

Lackawanna484 Wrote:
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>
> Yes.
>
> The part that amazes me is that there's so much
> emphasis on transporting the crude. Build a
> refinery out there, and transport gasoline. Keep
> the highly paid refinery jobs in Alberta, North
> Dakota, etc.

That's harder than building a pipeline, it is much easier to expand an existing refinery than to build new. Finally having a refinery right on the coast allows easy export of the refined product versus having the refinery located in the center of the continent. Which would you rather have a 120 car train of crude running through town or a 120 car train of gasoline?

Or maybe less refineries keeps the price of gasoline up?

wabash2800 Wrote:
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> Or maybe less refineries keeps the price of
> gasoline up?

It is kind of a balance thing. Price goes up, demand goes down. You can't turn refineries on and off easily. What does keep prices up is the fact that you can export gasoline and diesel fuel, and Coastal refineries do regularly, you are very limited in your ability to export crude. Finally year by year the number of Oil Refineries owned by the Oil Majors (Chevron, ExxonMobile, BP, Shell, and ConocoPhillips) goes down, as they keep selling off refineries that are not profitable.

SOO6617 Wrote:
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> wabash2800 Wrote:
> --------------------------------------------------
> -----
> > Or maybe less refineries keeps the price of
> > gasoline up?
>
> It is kind of a balance thing. Price goes up,
> demand goes down. You can't turn refineries on and
> off easily. What does keep prices up is the fact
> that you can export gasoline and diesel fuel, and
> Coastal refineries do regularly, you are very
> limited in your ability to export crude. Finally
> year by year the number of Oil Refineries owned by
> the Oil Majors (Chevron, ExxonMobile, BP, Shell,
> and ConocoPhillips) goes down, as they keep
> selling off refineries that are not profitable.


State rules also limit gasoline produced by a refinery to a small geographic area. Blame that on restrictions by state and regional formula requirements for things like ethanol content and other ingredients. It's resulted in a market where two or three refineries are the only (legal) source of fuel for metropolitan areas, etc.

Where will the ACL terminals be?

midwest Wrote:
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> Where will the ACL terminals be?


There five terminals transfer crude to barge currently, Hennepin, IL, Havana, Il, one in E. St. Louis, IL (don't remember exactly which municipality), Catoosa, OK, and Natchez, MS.