Category Archives: Crude By Rail

U.S. imports of Canadian crude oil by rail increase

Repost from Today in Energy

MAY 2, 2018

U.S. imports of Canadian crude oil by rail increase

monthly crude oil shipments by rail, as explained in the article text

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

Growth in Canadian crude oil production has outpaced expansions in pipeline takeaway capacity and, along with past pipeline outages, has driven Canadian crude oil prices lower and increased Canadian crude oil exports by rail to the United States. However, the outlook for increased volumes of Canadian crude oil shipped by rail to the United States is highly uncertain despite significant U.S. demand for Canadian crude oil, specifically on the U.S. Gulf Coast.

Crude oil production in Canada increased to 3.9 million barrels per day (b/d) in 2017, up approximately 300,000 b/d from 2016. However, crude oil pipeline capacity out of Canada has failed to keep pace with growing production. Consequently, volumes of Canadian crude oil exported to the United States by rail increased in 2017. In December 2017, U.S. imports of Canadian crude oil by rail set a monthly record of 205,000 b/d, nearly matching the amount of crude oil shipped by rail within the United States that month (246,000 b/d).

Changes in the relative prices of two crude oils—Western Canada Select (WCS) in Hardisty, Alberta, and West Texas Intermediate (WTI) in Cushing, Oklahoma—demonstrate the effects of transportation constraints. Until late 2017, WCS prices averaged $10 to $15 per barrel (b) lower than WTI, largely reflecting differences in the quality of the two crudes. In late 2017 and early 2018, as crude oil production began to exceed pipeline capacity and demand to transport crude oil by rail increased, WCS priced about $25/b lower than WTI.

The price spread between WCS and WTI has since narrowed to an average of $16/b in early April, suggesting some demand for transporting Canadian crude oil by rail has lessened. Low WCS prices may have led some Canadian crude oil producers to reduce output and advance schedules for planned maintenance, likely reducing the need to move crude oil by rail.

daily price differences of selected crude oil, as explained in the article text

Source: U.S. Energy Information Administration, based on Bloomberg, L.P.

Of the 144,000 b/d of Canadian crude oil imported by rail in 2017, about half (70,000 b/d) went to the U.S. Gulf Coast, or Petroleum Administration for Defense District (PADD) 3. Imports by rail made up 18% of total Canadian crude oil imports to the Gulf Coast, and 2% of the 3.1 million b/d of total crude oil imported by the Gulf Coast in 2017.

monthly crude oil receipts by rail from Canada, as explained in the article text

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

With an API gravity of approximately 20 degrees, WCS crude oil is a heavy crude oil that is attractive to Gulf Coast refiners that process heavier crude oil. Traditional suppliers of heavy crude oil into the Gulf Coast region, such as Venezuela and Mexico, have experienced production declines that resulted in lower crude oil exports, making Canada an increasingly important source of U.S. imports of heavy crude oil.

In January 2018, the U.S. Gulf Coast imported more crude oil from Canada (448,000 b/d) than from Venezuela (438,000 b/d) for the first time on record and imported more crude oil from Canada (379,000 b/d) than from Mexico (309,000 b/d) in September 2017. Another outlet for Canadian crude oil on the Gulf Coast may be re-exports. Since the removal of restrictions on crude oil exports from the United States, Canadian crude oil can be re-exported from the Gulf Coast without having to be segregated.

monthly U.S. Gulf Coast crude oil imports by country, as explained in the article text

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

Large-scale and sustained increases in crude oil by rail volumes from Canada face several obstacles from the Canadian rail industry and competing pipeline projects. Trade press reports indicate that before investing, Canadian rail companies are requiring that crude oil producers enter long-term commitments for crude oil-by-rail capacity. Canadian crude oil producers have been reluctant to agree to long-term rail commitments because pipeline capacity could increase in the short to medium term as new pipeline projects come online and some currently operating pipelines begin to ease volume restrictions.

Principal contributors: Arup Mallik, Mason Hamilton

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FEMA REPORT: Ensuring Rail Preparedness for Hazardous Materials Incidents

Public document from FEMA
[Editor: The seven recommendations appear on pages 4-7.  Pages 8-10 detail some interesting new technologies in responding to HAZMAT emergencies.  – RS]

Background:

US Department of Homeland Security - Federal Emergency Management AgencyThe RESPONSE Act of 2016 directed the Federal Emergency Management Agency (FEMA) to establish the Railroad Emergency Services Preparedness, Operational Needs, and Safety Evaluation (RESPONSE) Subcommittee… to provide recommendations for improving emergency responder training and resource allocation for HAZMAT incidents involving railroads.

Final Report And Recommendations

Click to open the REPORT

The final reportEnsuring Rail Preparedness: Improving Responder Training and Resource Allocation for Rail Hazardous Materials Incidents, contains seven recommendations that the NAC approved, based on proposed recommendations submitted by the RESPONSE Subcommittee.

 

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Crude oil tank cars derail in Texarkana – no spill or explosion

Repost from KSLA 12 News

Crews work to clear Texarkana train derailment

By Brett Kaprelian, Digital Content Producer, April 22nd 2018, 4:35 pm PDT

KSLA News 12 Shreveport, Louisiana News Weather & Sports

TEXARKANA, TX (KSLA) -Crews are working to clear a train derailment in Texarkana, Texas, Sunday afternoon.

It happened around 11:30 a.m. at the Union Pacific Texarkana Rail Yard.

A Union Pacific spokesman said the southbound train that derailed had 12 tank cars carrying crude oil from Canada down to Beaumont, Texas.

Nine cars are on their side and three are standing upright.

No injuries or leaks have been reported.

Crews are on site trying to clear the trains from the roadway.

According to the Union Pacific spokesman, the train tracks have been damaged by the derailment. Crews will work through the night to clear the scene and fix the tracks.

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