For North Dakota's railroads, the bonanza grows and grows

Mainline track capacity could be an issue for this traffic surge as the BNSF New Rockford sub is already close to capacity and as CP moves to get the operating ratio into the low 70s. Maybe the Minot-Grand Forks line actually is important to BNSF after all. And since you already reported Fred on the "slow go" on the CP Portal-Glenwood line, perhaps some directional running agreement with BNSF and CP between Minot and eastern North Dakota could be win-win for both railroads.

I'm guessing that Canada will ship the oil to their west coast for export to China, and until sufficient pipeline capacity is built, CN or CP (or both) will be major beneficiaries.  What a dumb$1***$2decision not to build the Keystone!!

Looks like oil traffic will be the savior of some of the remaining grain hauling branches, causing them to be upgraded. Wonder if any of the abandoned ones will be rebuilt?

The Canadian Tar Sands product that would have been the primary user of the Keystone XL pipeline is better described as bitumen rather than crude oil, very heavy and hard to keep in solution so it can flow. The big problem if you were to have a leak with that stuff is not the bitumen, but rather the dilutent. If you have a leak the bitumen just piles up and can be fairly easily recovered, the dilutent however will readily soak into the ground and is all the things that environmentalists fear from fracking fluids. The nice thing about transporting the Canadian product by rail is that all you need to do is keep it hot, like you do when shipping molten sulphur. If necessary you might need to shoot a little steam through the coils if it cools too much in transit.

beaulieu,

I know of no product that is actively heated while in rail tansportation. Molten Sulfur is loaded hot in insulated cars. If it has solidified, in whole or in part, then it has to be heated to be unloaded. Long standard technology to do that is, of course, steam coils. I have heard or, but not seen, electrically heated tank cars used to transport pitch. I guess in theory you could have one or two generators in train but very heavy electrical connections between 100 or so tanks would be a challenge in terms of reliability.

Mac

Darn good article, Fred, with interesting compilations and correlations of facts from your research.  (Author Tom Clancy has pointed out that good reporters are essentially the same as intelligence analysts . . . )  More later, but in the meantime 1 question:  How are BNSF and NS routing this traffic to avoid the Chicago-area congestion, for which neither railroad nor these trains have any need ?

- Paul North.  

With pipelines holding at least a 4 to 1 financial advantage over rail, the oil will finally move by pipeline.  Rail will get some of it when new wells overwhelm the pipelines until the new production amounts to enough to build another pipeline. Railroads have always been subject to boom and bust in the oil industry.  And, in spite of what the greenies say, pipelines are the safest transportation method.  

Tom Stamey

tomstarney:

You indicated a 4-1 advantage for pipelines.  I am not doubting you, but attempting to verify the costs of moving product.  Does anyone here have a solid cost structure for moving product by pipeline?  

We could probably come up with a close cost for rail, based on existing tariffs, etc. but pipeline products no doubt move by contract.

Thanks Fred for an excellent look at this industry challenge and opportunity.

Ed

It's a shame all that oil and ethanol are mostly moving in the same direction (to the refineries) and they can't backhaul each other.  It will be a boom for tank car manufacturers for a while.

Unfortunately, our government continues to pick winners and losers.  Fortunately, railroads are flexible enough and have good enough management to "work around" the problems, so far.  Maybe this oil business will offset the coal our government is trying to take away.

My understanding is the the Canadian tar sands "oil" and the North Dakota oil are quite different (bitumen vs sweet crude) and there is no way to add and mix the ND oil to the Canadian oil in one pipeline as it is pumped south to Texas.

An advantange of rail over pipeline is that oil by rail can be shipped to a refinery that offers the best price.  

Paul North: This train runs right through Chicago, via the BNSF's Cicero Yard. There is no real reason unit trains need be long delayed getting through Chicago, IMHO. The powers that be at BNSF and NS appear to agree with me, for a change.

Royalrr08: Everything I've read (including the environmental impact statement, I think) says that light sweet crude would be welcomed in a mix with tar sands oil. Keystone says it's not a problem. Therefore, until I get convincing evidence otherwise, it's not a problem to mix the two grades of crude oil.

Fred Frailey

Thanks for that additional info, Fred.  Good to see that "they found the track" directly across Chicago, as John Kneiling used to say . . . ;-)

- Paul North.    

Excellent article on North Dakota.  Fortunately underground geology doesn't know about international boundaries which means that the Bakken formation continues into SE Saskatchewan and SW Manitoba.  The railways are also moving oil on this side of the border, specifically CN on a branch line that runs from Maryfield down to Bienfait just outside of Estevan.  Along this line there are several loading points for loading crude oil on tank cars and for unloading pipe and frac sand.  CP of course loads oil at Estevan and there is also a loading point at Stoughton Sk on former CP tracks that run NW to Regina.  I'm not sure of the name of the shortline that now owns these tracks, I only know I have seen lots of tank cars being loaded.  Thanks again for the article on this good news story for both Canada and the US.