• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 4 hours OPEC will consider all options. What options do they have ?
  • 4 hours Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 53 mins Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 7 hours What to tell my students
  • 5 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 4 hours A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 11 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 5 hours China Threatens to Withhold Rare Earth Metals
  • 7 hours With Global Warming Greenland is Prime Real Estate
  • 20 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 19 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents, building nukes * Too late now
  • 16 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 21 hours Flaring is at Record Highs in Texas
James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

Premium Content

Pipeline Companies Struggle Against Rising Competition from Rail

Despite the fact that new, stricter regulations on the transport of hazardous materials by rail, introduced following the derailment and explosion of a train carrying crude oil through Quebec in July, will see rail transport costs increase, the volume of crude travelling by rail across North America is expected to rise greatly in the coming year.

Delays associated with the development of pipelines, and the process of receiving permits, have seen more and more oil transported to refineries via rail roads in recent years, especially as the amount of oil being produced in North America has grown.

TransCanada believes that rail shipments of oil from Western Canada will increase by 400% from around 224,000 barrels a day before the end of next year, as new loading terminals are built to put more oil-sands onto railcars. Wood Mackenzie has also claimed that the amount of oil shipped to the east and west coasts from the Bakken fields will increase by a factor of four this year.

Related article: North Dakota in Spotlight after Oil Spill

Alex Pourbaix, the president of energy and oil pipelines at TransCanada, stated that the only reason railroads were becoming more popular, was because pipelines were taking too long to receive approval. The fact is that pipelines actually offer a safer, cheaper method of transporting oil, but due to the delays, demand for oil transportation has outgrown the capacity that pipelines can supply.

Oil by Rail

In the wake of the 6th of July derailing in Lac-Megantic, Quebec, which killed 47 people, Transport Canada introduced emergency directives to control the transport of hazardous materials, such as crude oil, by rail. The department is now considering even stricter rules for hazardous materials, and it is expected that such rules will force large capital investiture by rail companies, and therefor boost the cost of transporting by rail.

Jerry Swank, a managing partner at Swank Capital, explained to Bloomberg that “you’re going to see a massive flood of spending to get ahead of these government regulations,” as rail companies try and prepare for any tighter laws on safety.

Related article: From Peak Oil to Fossil Fuel Euphoria

Harold Hamm, the chief executive at Continental Resources, has said that his company is now using rail cars to move 75% of its crude, mainly due to the lack of pipeline capacity.

“The good thing about it is it goes to the market faster and directly where you want it and it doesn’t have to go the pipeline route.”

The increasing competition from rail operators has actually made it difficult for several pipeline companies to secure long-term contracts from oil producers, forcing them to postpone, or cancel, projects for the construction of new pipes.

By. James Burgess of Oilprice.com




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play