Rail May Hold its Own Against Pipelines

The Association of American Railroads reports the number of rail tankers carrying crude oil and petroleum products in the United States increased more than 35 percent during the first six months of the year when compared with 2011. After the U.S. Energy Department, in its report, noted the lack of pipeline infrastructure in North Dakota, British supermajor BP announced it was considering rail to bring oil from the Bakken formation there to its refinery in Washington state. In terms of the environmental footprint, meanwhile, rail deliveries account for less than 1 percent of the total emissions from the transportation sector. These findings come even though rail shipments are three times more expensive than pipeline deliveries

The AAR finds that 241,000 rail tanker cars hauled oil during the six-month period ending in June, a 38 percent increase over the same period in 2011. For June, rail deliveries increased 51 percent over their 2011 levels for the month. Each rail tanker carries around 700 barrels of oil, meaning June deliveries translated to nearly 1 million barrels per day. The U.S. Energy Department's Energy Information Administration attributes much of the increase in rail deliveries to the oil boom under way in North Dakota, which in March became the second-largest oil producing U.S. state. Oil producers in the region, however, rely on rail to get oil out of the region and BP this week said it was considering a rail project to bring Bakken crude to its 225,000-bpd refinery in Washington. The permitting process could begin as early as next month.

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