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Tar Sands oil pipeline update

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Posted by samfp1943 on Friday, November 18, 2011 1:31 PM

While reading some news sites I monitor,  I found the following linked article. It is from a site that belongs to the Daily Mail site:  [blogs.Daily Mail.com]  .  

   The newspaper is the Charleston (W.Va.) Daily Mail. The article is by Don Surber. 

Since it references how the write of the blog views the current administration and it position with Warren Buffett and his ownership of the BNSF RR, and its ties to the current topic.  I thought it bore posting here for thoughts and comments.

link: http://blogs.dailymail.com/donsurber/archives/46466

 

 


 

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Posted by MidlandMike on Friday, November 18, 2011 2:14 PM

Bucyrus

But if they needed the extra capacity of the short-cut line through the Sand Hills, how does the "reverse flow" link from OK to TX solve the problem of losing the needed extra capacity of the line through the Sand Hills?

The OK-TX existing line only has about half of the capacity of the planned line and is only a temporary fix for present flow.  If they build the extra capacity short-cut (now proposed to skirt the Sand Hills) they will also need more capacity in the OK-TX lane.

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Posted by Norm48327 on Friday, November 18, 2011 2:21 PM

I have to claim ignorance, but wouldn't it cost less to build a refinery close to the source of the oil than a  long pipeline?

Norm


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Posted by MidlandMike on Friday, November 18, 2011 3:50 PM

Norm48327

I have to claim ignorance, but wouldn't it cost less to build a refinery close to the source of the oil than a  long pipeline?

The efficiency model has to transport the crude oil (pipeline, tanker, etc.) to the refineries nearer to the centers of population, and then to locally distribute it's many products.  If you build the refinery near the oil source, then you still must transport all the products to the population centers, buy separately in less efficient smaller batches, some by different means.

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Posted by Paul_D_North_Jr on Friday, November 18, 2011 5:47 PM

Bucyrus
  Paul,
Strangely, it seems like the news of killing the pipeline project has morphed into news about eliminating an oil transport bottleneck out of Cushing, OK.  I don’t get the connection unless it is just to put market happy-face on killing the tar sands pipeline.  
I can’t tell if this turnabout is the actual news media thrust, or if it is just something happening in this thread. 

  Bucyrus -

 

Although I made several posts related to the Cushing, OK crude oil supply situation, that wasn't done to divert or distract from the pipeline politics, in which I have little interest, nor in its effects on the global warming debate.  Instead, my posts were made primarily to share and better inform other members about more of the facts about this matter, because for sure I don't claim to fully comprehend all of it.  My interests are more in the nature of whether there's an opportunity for a rail move of the oil, perhaps at the expense of - or in conjunction with - this or another pipeline, depending on what the market wants.

 

Interestingly, this week's events and their effect on the crude oil prices at Cushing pretty much disabuse the "efficient markets" theory, which in brief is that markets and their participants collectively 'know all and see all' and take that information into proper account in their pricing.  That sudden of a change in the local price and the differential with the Brent North Sea crude benchmark tells me that no one (or at least not many) saw this change in the Seaway pipeline's ownership and flow direction coming, and they were mostly caught flat-footed by it.      

 

So I'm just trying to understand the principal forces on this market, and see what role - if any - the rails can play in moving crude oil.  I prefer and tend to focus more on the more objective and deterministic fundamentals of supply, demand, capacity, operations, etc. than the fuzzier and subjective political aspects, that's all. 

 

- Paul North.

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
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Posted by edblysard on Friday, November 18, 2011 6:09 PM

Odd as it may seem, the answer is no.

The cost of building a new refinery with the projected capacity would be close to building, from the foundations and infrastructure up, 2 maybe 3 medium to small towns, plus the cost of meeting the new EPA regulations, all of which places this option beyond the cost recovery.

They would have to have rail, water and roadway access to boot.

That's one of the major reasons there are so many refineries along the Houston Ship channel, they can receive and ship by water and rail...the majority of product arrives and leaves by ship and pipeline.

 

Norm48327

I have to claim ignorance, but wouldn't it cost less to build a refinery close to the source of the oil than a  long pipeline?

23 17 46 11

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Posted by Anonymous on Friday, November 18, 2011 11:45 PM

Paul,

 

I understand what you mean.  My thoughts about the story morphing were mainly directed at the media news flow on the pipeline delay.  I only meant to mentioned this thread as seeming to reflect that. 

 

But as I understand this further, the evolving story is related to the pipeline cancellation in this way:  The segment through the Sand Hills from Canada was not the most urgently necessary part, and will not be needed until after 2015.  The OK to TX segment is the more urgently needed part of the pipeline, and its loss will be compensated for by reversing the flow on the existing Seaway pipeline on that route.   

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Posted by da_kraut on Thursday, November 24, 2011 11:18 PM

Hello everybody,

it is a interesting posting to read.  Here people are upset about a pipe line going through their state or area, BIG DEAL.  Have any of you actually been up to Fort McMurray and seen the destruction of the strip mining.  The pollution that is produced by this process to create the bitumen is immense, the natural gas that is used in the process is astronomical.    If you take google maps and go to the tar sands and look at the destruction of Boreal forest and the huge sludge ponds you will see that a pipeline is peanuts compared to the destruction going on up there.   How do I know, worked next to the Suncor plant for 7 months,  after two weeks the snow is a dark grey.  When the weather conditions were right the main smoke stack had a layer of grey pollution in the air that stretched for miles.  At least a half a dozen flare stacks were burning all the time.

Also we have to change our policies up here in Canada, we will only ship finished products.  Never mind a pipeline down south.  If you want any of the products that come from the tar sands then they will be refined products.  Correct me if I am wrong but I believe it is not possible to transfer different grades of Gas, Diesel and other products via pipeline.  So the only logical solution would be the railways.  At least that is how I think this should be done.     AS for profit, Shell Scotsford build a mirror image of their refinery near Fort Saskatchewan in Alberta.  It cost over 12 Billion Dollars to build.  The plant will pay for itself in a YEAR!!!   This area is actually a great place to see SD40-2's in action.  That is the preferred switcher for both CP and CN.

Frank

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Posted by erikem on Friday, November 25, 2011 12:25 AM

da_kraut

Correct me if I am wrong but I believe it is not possible to transfer different grades of Gas, Diesel and other products via pipeline.

Frank,

You're wrong...Smile

Transferring different grades of Gas, Diesel and Jet Fuel in one pipeline is done all the time. Some additives have to be added after delivery as they are incompatible with other products.

San Diego is served by one petroleum products pipeline that was originally built by a joint venture between the AT&SF and SP. The pipeline has a tap-off point at MCAS Miramar and there is a branch to the main USN base in San Diego Bay.

- Erik

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Posted by ericsp on Friday, November 25, 2011 5:09 AM

erikem

 

 da_kraut:

 

Correct me if I am wrong but I believe it is not possible to transfer different grades of Gas, Diesel and other products via pipeline.

 

 

Frank,

You're wrong...Smile

Transferring different grades of Gas, Diesel and Jet Fuel in one pipeline is done all the time. Some additives have to be added after delivery as they are incompatible with other products.

San Diego is served by one petroleum products pipeline that was originally built by a joint venture between the AT&SF and SP. The pipeline has a tap-off point at MCAS Miramar and there is a branch to the main USN base in San Diego Bay.

- Erik

http://www.ask.com/web?l=dir&qsrc=0&o=ffx&q=transmix

"No soup for you!" - Yev Kassem (from Seinfeld)

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Posted by Paul_D_North_Jr on Friday, November 25, 2011 2:35 PM

This link is a good intro to the capability of pipelines to handle different commodities, the resulting "transmix" problem, and some ways that it is dealt with:

http://www.innovative-sensor.com/Brochures/Transmix.pdf

Thanks for the 1st link, eric !

- Paul North.   

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)

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