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Railroads Facilitate Oil Production Boom as Pipeline Construction Falters

August 7th, 2013 | by Morris Beschloss | Comments

As nature abhors a vacuum, the oil and natural gas “fracking” boom was not to be denied. As an increasing number of shales in the Dakotas, Middle Atlantic, Texas, and potentially far more widespread, had made crude oil available by one million barrels a day in the past year, the lack of nationwide pipeline capability caused this oil sector to turn to railroads which have acted to facilitate ready access to America’s 143 refining facilities. Although representing the world’s most prolific spread of refining units, the lack of mobility from “excavation” to the relevant refining location has produced increasing lack of transportation flexibility. This has produced a mounting glut in Cushing, Oklahoma, increasing its crude inventories to record levels.

Not to be deterred by the government agency hangups regarding pipeline expansion, increasingly perpetuated by the Environmental Protection Agency and its offshoots, oil producers have shifted dramatically toward North America’s prodigious railroad system. While increasingly lagging as a carrier of industrial finished goods, and especially commodities for decades, the railroad sector stood ready, willing and able to provide both short and long-term mobility to solve the surging energy’s most recent conundrum.

The success of this effort has been proven by the more than 350,000 carloads of crude-by-rail shipments that have evolved in the past five years. Even this impressive level continues to grow, as proven by 200,000 car loads of oil sands in 2012 alone. This has further facilitated the transportation of consequential oil derivatives, such as chemicals, plastics, and natural gas liquids. The latter is only in its infancy as dry docks are being built for a massive international export business.

Even if and when such controversial major pipelines as the Trans-Canada XL oil pipeline are approved, rail lines will continue to be advantageous when it comes to rapidity of service, and the ability to reach refineries that are now and never will be within quick striking distance of areas of production or usage.

Other than the recent human tragedy caused by an oil tanker explosion in a small Quebec, Canada town, the rail transportation has proven remarkably effective and safe. The incredible volume of “crude” emanating from the Bakken Belt would have been impossible to facilitate without the ready availability of a responsive rail system.

It should be remembered that the prime objective of current government policy is the eventual elimination of fossil fuels (coal, oil, natural gas) and their replacement by “renewables.” Therefore, the “railroads” are on their own in updating, upgrading, and keeping safe the huge new transportation potential now under their stewardship. They are wise to be alerted to the EPA, or other government agencies ready to apply the “screws” if similar events, such as “Quebec,” occur within the U.S.

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