Posts Tagged ‘crude oil by rail’

Bakken Crude Producers Cutting Their Production

March 14, 2016

An analyst who studies the crude oil industry reports that producers in the Bakken oil field are reducing their production and that trend is expected to continue through 2016.

Falling oil prices have triggered the production cuts. Much of the oil pumped in the Bakken region of North Dakota and Montana is transported by rail.

The report by RBN Energy LLC analyst Sandy Fielden did not provide any information about shipping of Bakken crude by rail.

“For the past, year many shale oil producers have defied the expectations of many and kept output at or near to record levels in the face of falling oil prices and much tougher economics,”  Fielden wrote. “Improvements in productivity, cost cutting and a concentration on ‘sweet spot’ wells that generate high initial production rates have all helped cash-strapped producers survive. But with oil prices so far in 2016 stuck in the $35/Bbl and lower range and with the worldwide crude storage glut still weighing on the market, producers are finally pulling back.”

In December there were 1,183 inactive wells in North Dakota and the number of new permits to drill wells has reached a seven-year low.

Fielden said the operators of the inactive wells have essentially abandoned them, usually because they are losing money.

The report described these wells as being older and having very low production rates

Fielden said the expectation that oil prices might remain low for a long time has shaken the market for crude oil from shale in the United States with many smaller operators having gone bankrupt.

He acknowledged that the extent of the production decline remains difficult to forecast because of the potential effect of drilled but uncompleted wells.

Rail Crude Oil Traffic Fell 16.8% in 2015

February 26, 2016

Crude oil traffic on U.S. railroads fell 16.8 percent in 2015, reflecting a slowing of domestic oil production.

The Association of American Railroads said that U.S. railroads moved 410,249 carloads of crude oil last year, which was down by 82,897 carloads from the 2014 figure.

AARIn 2015, crude oil accounted for 1.4 percent of total U.S. carloads, a slight drop from 1.6 percent in 2014.

There was good news, though, for U.S. railroads last week as intermodal traffic posted an 18.2 percent gain for the week ending Feb. 20 compared with the same week in 2014.

Carload traffic volumes, however, were down 5.7 percent with railroads carrying 244,747 carloads during the week.

Five of the 10 carload commodity groups that AAR tracks saw increases. They included motor vehicles and parts, up 30.7 percent; miscellaneous carloads, up 22.5 percent; and nonmetallic minerals, up 6.4 percent.

Commodity groups that posted decreases during the week included petroleum and petroleum products, down 22.1 percent; coal, down 20.2 percent; and farm products (excluding grain) and food, down 5.7 percent.

For the first seven weeks of 2016, U.S. railroads have posted cumulative volume of 1,698,803 carloads, down 14.3 percent from the same point last year; and 1,815,728 intermodal units, up 7.3 percent from last year. The total combined U.S. traffic for the seven-week period was 3,514,531 carloads and intermodal units, down 4.4 percent compared the same period in 2015.

Pa. Crude Oil Report has 27 Suggestions

August 18, 2015

A report written for the state of Pennsylvania pertaining to crude oil by rail safety has 27 recommendations, including implementing standards for infrastructure and equipment testing, especially for track and wheel defects, and a 35 mph speed limit through urban areas.

The recommendations also call for increased inspections and protocols for coordination between state and federal agencies.

Titled “Assessment of Crude by Rail Safety Issues in Commonwealth of Pennsylvania,” the report was prepared by Allan Zarembski,  who was hired by the state in late April.

“Every week, roughly 60 to 70 trains carrying crude oil travel through Pennsylvania destined for Philadelphia or another East Coast refinery, and I have expressed grave concern regarding the transportation of this oil and have taken several steps to prevent potential oil train derailments,” said Gov. Tom Wolf. “Protecting Pennsylvanians is my top priority and Dr. Zarembski’s report is important in helping my administration take the necessary steps. I will also continue to work with CSX and Norfolk Southern, both of which have demonstrated concern for rail safety and an interest in working with my administration.”

The recommendations are divided into primary and secondary categories.

Primary categories are expected to have direct safety results and can be implemented by the railroads directly working with the state or by the state itself.

Secondary categories include actions that are more difficult to implement or which may require action by a party other than the railroad or the state.

In May, Wolf sent a letter to CSX and NS urging them to adopt improved safety initiatives for all trains with crude-by-rail cars operating in Pennsylvania and to fully and expeditiously comply with the U.S. Department of Transportation’s announced Final Rule.

To read the full report, go to www.governor.pa.gov.