Why The Oil Industry Might Prefer Rail To Pipelines In Turbulent Times

[thackney]

Why The Oil Industry Might Prefer Rail To Pipelines In Turbulent Times
https://www.forbes.com/sites/ucenergy/2017/07/19/why-the-oil-industry-might-prefer-rail-to-pipelines-in-turbulent-times/#423d153d358c
JUL 19, 2017

After three years of planning, nearly $4 billion in capital investment and a year of legal disputes and protests, the Dakota Access Pipeline began transporting crude oil from the Bakken Shale region of North Dakota to the Gulf Coast last month. The move came just two months after President Trump issued the permits for the even-more-contested Keystone XL pipeline, which, if completed, would link the Canadian tar sands to U.S. consumption and export markets.

With a capacity of half a million barrels of oil a day, the delayed arrival of the Dakota Access Pipeline will once again make pipelines the dominant way to transport oil out of the upper Midwest into coastal refining regions.  For oil producers and refiners, who will benefit from lower transportation costs, this is a great outcome.  For environmentalists and tribal leaders, who argued that the pipeline would generate local and global environmental risks, the pipeline’s arrival is surely a disappointment.

Protesters aren’t the only ones who are unhappy with the new pipeline’s arrival.  Joining them is the railroad industry, which stands to lose what was until recently a sizable business transporting crude oil out of the Bakken into refining regions. However, the rail industry has good reason to remain optimistic since it offers something pipelines can’t: flexibility in a perpetually volatile market.

Until the beginning of last year, the majority of crude oil produced in the booming Bakken region was transported by rail to refining centers in the Gulf, East and West coasts.  At its recent peak, crude-by-rail carried about 10% of U.S. oil production, up from less than 1% in 2010. Though there is no reliable long-term data on crude-by-rail, it is quite possible that the last time the rail industry transported as much crude oil as it does today—20% of Bakken production and 4% of total U.S. production—was during the Standard Oil era of the early 20th century....

[Smokin Joe]

Both are vulnerable to political turbulence and terrorist acts. Pipeline valves were shut by 'protesters' on active pipelines during the DAPL protests. Operators shut down the lines to prevent further complications, but such acts of tampering (sabotage) could cause problems. At the same time, insurgents have ever been notorious for derailing trains, too. Dangerous times are. No guarantees.