PNWRMNM [snipped] Last I knew BNSF is getting about $2500 per car for export grain in unit trains from MN, IA, NE to PNW, a distance less than 2000 miles. If we assume 1600 miles average, that is $1.56 per loaded car mile, with empty return. [snipped]
But Fred Frailey is rebutting me in the comments to his blog post "The next Powder River Basin" of 11-11-2011 (at: http://cs.trains.com/TRCCS/blogs/fred-frailey/archive/2011/11/11/the-next-powder-river-basin.aspx#comments ) that his rail sources are telling him that just the differential between rail and pipeline is $7 to $10 per barrel - not the $3 difference cited by Don Oltmann a few posts above. Although, personally I can see that being the case, with the $7 to $10 being the total cost of the rail move for the 1,600 mile range, but maybe just the differential for CN's much longer 2,500 mile move.
It's all potentially quite confusing, but at least the railroads are not out of the ballpark on price, and likely ready to go in the time frame when needed !
- Paul North.
Contamination is not a problem with pipelines. Products are separated by a pig or slug of water. i live in Tucson AZ. Every drop of gasoline, diesel, aviation fuel, and any other bulk product of sufficient volume arrive here via 1 pipeline, that of Kinder Morgan which runs from El Paso to Los Angeles. Everything for Tucson and Phoenix arrives through an 8 inch pipeline. It can travel in either direction if needed. Refined products such as these can move very efficiently through a pipe of this size. The only thing that arrives by rail or truck is ethanol which is about 5% of the total.
Think this thing through. Would it be practical for you to receive your residential water supply by truck or rail? Yet the quantities are magnitudes smaller. Obviously the pipeline is more efficient. If you still don't believe me then I suggest that you try to fill two swimming pools. One by your garden hose. The other from an identical faucet, the same distance away, but you must carry the water in a bucket. Somewhere in there i suspect you will have an epiphany.
tdmidget Think this thing through. Would it be practical for you to receive your residential water supply by truck or rail? Yet the quantities are magnitudes smaller. Obviously the pipeline is more efficient. If you still don't believe me then I suggest that you try to fill two swimming pools. One by your garden hose. The other from an identical faucet, the same distance away, but you must carry the water in a bucket. Somewhere in there i suspect you will have an epiphany.
But what if you had to apply for a permit to use the garden hose, and it could take years of review for approval, and there was no guarantee that any permit would be granted?
More aptly - What if the swimming pool was on the other side of your neighbor's house, so your alternatives are either to get his/ her permission to dig up and bury the hose in your neighbor's lawn and around his/ her house, or carry the buckets ? And it's a hot summer there in Arizona, and you'd really like to use the pool by the end of the week ?
Also, consider this: Q: If pipelines are so great - why are there tanker ships ? A: Because distance, geography, volume, capacity, and cost all matter.
tdmidget Contamination is not a problem with pipelines. Products are separated by a pig or slug of water....
Contamination is not a problem with pipelines. Products are separated by a pig or slug of water....
Cross-contamination of different products thru a pipeline is an added cost problem. It either produces a transmix which results in reprocessing or at least a downgraded product, or in the case of a water spacer, a slug of water to treat and dispose of properly.
Paul,
I think my rail rates and rail costs are ballpark correct. It is possible that carriers would demand some up front cash for capacity improvements. The cash could be repaid as a reduction in the rate over some period of time.
The cost of the rail project would include capital and operating cost of loading and unloading facilities. Tank car unit costs would be maybe 30% higher than covered hopper cars on a per car basis. My default technology would be tank trains to minimize loading time and costs.
One thing I can not quite figure out is if, as some here claim, this material would have to be heated to unload from tank cars, how can it be pumped 1660 miles through an in ground pipeline?
Another thing no one else has talked about is relative exposure to inflation. Rail is certainly more exposed than pipeline, which is virtually a fixed cost operation measured over time. To insulate myself from this as much as possible if I were the selling oil company, I would purchase the tank cars. I would pay for them over 15 years but have an asset with a physical life of 50 years, so the last 35 years are free from a cash flow perspective. Controlling the tank car fleet is a big piece of how J. D. Rockerfeller made his first billion dollars, back when a million was real money.
Mac
PNWRMNM One thing I can not quite figure out is if, as some here claim, this material would have to be heated to unload from tank cars, how can it be pumped 1660 miles through an in ground pipeline?
That is something I have been wondering about, but there seems to be no clear answer on the Internet. Apparently, the tar sands crude can be moved through a pipeline, but must either be heated to thin it, or be thinned at the source by blending it with a solvent. My understanding is that the method for pipeline transport is thinning with a solvent. I speculate that the solvent is recovered at the destination and reused at the source of the crude.
I further speculate that the solvent thinning would used in the rail transport option. The solvent is shipped to the tar sands source by rail.
Some have mentioned using steam coils in the tank cars, which has been typical for some products that do not flow adequately in cold weather. In conjunction with this heating at the destination, the product could be heated at the source and shipped in insulated tank cars. However, I find it difficult to imagine the use of the steam coil option in high-production unit trains of crude.
Both the pipeline and rail option require the use of energy to move the product. The energy needed to heat the product for unloading (or maintaining the temperature during transit) would add a considerable cost.
Bucyrus,
I concur that steaming cars would be slow and expensive. If solvent were used it could be returned reverse route to origin and reused. That may be an advantage to rail.
Bucyrus PNWRMNM: One thing I can not quite figure out is if, as some here claim, this material would have to be heated to unload from tank cars, how can it be pumped 1660 miles through an in ground pipeline? That is something I have been wondering about, but there seems to be no clear answer on the Internet. Apparently, the tar sands crude can be moved through a pipeline, but must either be heated to thin it, or be thinned at the source by blending it with a solvent. My understanding is that the method for pipeline transport is thinning with a solvent. I speculate that the solvent is recovered at the destination and reused at the source of the crude. I further speculate that the solvent thinning would used in the rail transport option. The solvent is shipped to the tar sands source by rail. Some have mentioned using steam coils in the tank cars, which has been typical for some products that do not flow adequately in cold weather. In conjunction with this heating at the destination, the product could be heated at the source and shipped in insulated tank cars. However, I find it difficult to imagine the use of the steam coil option in high-production unit trains of crude. Both the pipeline and rail option require the use of energy to move the product. The energy needed to heat the product for unloading (or maintaining the temperature during transit) would add a considerable cost.
PNWRMNM: One thing I can not quite figure out is if, as some here claim, this material would have to be heated to unload from tank cars, how can it be pumped 1660 miles through an in ground pipeline?
The tar sand oil, as I recall, is thinned with a lighter grade crude to make it mobile. I can't recall whether it is done as part of the production process or transportation process. Since lighter crude is more volatile, it may be more susceptible to shrinkage during rail transport, than during closed pipeline transport.
Here is a link on tar sand crude issues that mentions the thinning compound, and says it contains large amounts of benzene. Generally, from what I have found on the web, there is considerable environmental objection to the use of this thinning compound because it is more toxic than the crude, and in the case of a spill, it sinks deeply into the ground along with the crude oil. Also, the thinning compound alone is shipped to the tar sands origin by rail, and because of its ability to quickly percolate into the ground a long distance, there is worry about derailments spilling the thinning compound.
http://www.onearth.org/article/tar-sands-oil-plagues-a-michigan-community
Bucyrus Here is a link on tar sand crude issues that mentions the thinning compound, and says it contains large amounts of benzene. Generally, from what I have found on the web, there is considerable environmental objection to the use of this thinning compound because it is more toxic than the crude, and in the case of a spill, it sinks deeply into the ground along with the crude oil. Also, the thinning compound alone is shipped to the tar sands origin by rail, and because of its ability to quickly percolate into the ground a long distance, there is worry about derailments spilling the thinning compound. http://www.onearth.org/article/tar-sands-oil-plagues-a-michigan-community
So where does "safe, clean energy" enter our lives?
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Midland,
There would be no "shrinkage" of lighter crude during transport. Tank cars are designed to keep the product in the tank under normal ambient conditions.
Assuming the solvent is all or part benzene, it could be returned in tank cars. Benzene and benzene mixtures have been shipped in tank cars for decades. If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent.
So, transporting crude oil has risk! Is that news? Supertankers sink, pipelines rupture, trains derail. Pick your poison.
Life is an industrial society is full of risk, but we generally will take the risk to get the rewards. The trick is minimizing the risk. Where, and to a lesser degree, how to run a pipeline is a completely different question than "if". I think I prefer a train or pipeline to move Canadian oil to a oiler crossing the Gulf and up the Delaware River.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
I am not saying that transporting the oil, or the thinner, or a mixture of the two is something cannot be done in conjunction with rail. I only mention the objections that are seen from the environmentalist perspective. That cannot be dismissed because it was environmentalists that were able to kill the pipeline.
And if you Google around, you can find that environmentalists are not amused by the idea of Canadian oil making an end run around the pipeline option by resorting to rail. They see spill hazards in any mode of transport. Their point has always been the oil, not the pipeline. And they note that rail transport uses more energy and causes more global warming than pipeline transport. So the opposition that killed the pipeline thinks the pipeline was the greener, more preferable option compared to rail.
The one advantage I see for rail is the fact that it already exists, and its ability to ramp up gradually, so it attracts less attention than an all-or-nothing new pipeline starting from scratch.
PNWRMNM Midland, There would be no "shrinkage" of lighter crude during transport. Tank cars are designed to keep the product in the tank under normal ambient conditions. Bucyrus, Assuming the solvent is all or part benzene, it could be returned in tank cars. Benzene and benzene mixtures have been shipped in tank cars for decades. If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent. Mac
My presumption is that crude tank cars have a pressure relief valve that would let some vapor blow-off if the car set out in the hot sun for a long time.
The use of the word solvent is misleading. The heavy oil is thinned with condensate (a real light crude, sometimes called natural gasoline, that old oilfield workers said they used in their cars during WWII rationing days) if its available, or refined products like naptha. While there is certainly benzine and lots of other aromatics in these lighter oils, the article in the environmental group's newsletter emphasizes the worst component out of proportion. My guess is that all of the oil mix would be utilized as refinery feedstock.
PNWRMNM ................ If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent. Mac
................ If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent.
Thanks to Chris / CopCarSS for my avatar.
Re. the (earlier) discussion here on land grants and the extent to which the rails have repaid earlier favors:
In 1946, the House Committee on Interstate and Foreign Commerce found: "It is possible that the railroads have contributed over $900 million (in free and half-cost services to the government) in (repayment) of the lands ... This is double the amount received for the lands sold by the railroads plus the estimated value of such lands still under railroad ownership. (It is) estimated that the total value of the lands at the time they were granted ... was not more than $126 million."
Source: The Story of American Railroads, by Stewart H. Holbrook, pg. 162.
To this payback it is traditional to add the enhanced value to lands retained by the federal government, which now had access to transportation.
In any case, Washington decided it had been sufficiently reimbursed in 1946, henceforth paying the rails full price for transportation of passengers, mail, materiel and what have you, like any other customer.
dakotafred Re. the (earlier) discussion here on land grants and the extent to which the rails have repaid earlier favors: In 1946, the House Committee on Interstate and Foreign Commerce found: "It is possible that the railroads have contributed over $900 million (in free and half-cost services to the government) in (repayment) of the lands ... This is double the amount received for the lands sold by the railroads plus the estimated value of such lands still under railroad ownership. (It is) estimated that the total value of the lands at the time they were granted ... was not more than $126 million." Source: The Story of American Railroads, by Stewart H. Holbrook, pg. 162. To this payback it is traditional to add the enhanced value to lands retained by the federal government, which now had access to transportation. In any case, Washington decided it had been sufficiently reimbursed in 1946, henceforth paying the rails full price for transportation of passengers, mail, materiel and what have you, like any other customer.
Holbrook was a pen for hire and articulated what the railroads wanted you to know. That being said, it is probably a fairly accurate statement. However, different political opinions will come in and knitpick the whole thing to pieces. Since America judges success in dollars and cents rather than broad accomplishments and results beyond the bank account, the accuracy of Holbrook and the truth of what the land grants, charters, loans, grants, and privilidges is always an arguement rather than a sure statement.. Railroads replaced canals and were replace by the highway system as we know it. For the most part, railroads were the only ventures of transportation led by private capital and enterprise (yes, there were a few canals and fewer roads built by private enterprise, but nothing on the scale of railroads). How quickly would the mid and far west have been settled and developed if it weren't for the railroads? Would hve happend, yes, but much more slowly...so what's the price on speed here? It is history, the past; it did the job it did and can't be undone for any amout of money. So let's move on to the present and apply what has been done and learned so that we can build tomorrow. Splitting political hairs over the past gains nothing but wasted time in the present to deal with the future.
Murphy Siding PNWRMNM: ................ If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent. Mac Why would exemptions be granted for benzene?
PNWRMNM: ................ If it is a benzene mixture, the proponents would likely apply for, and receive an "exemption" from DOT and CTC for waiver from the 263,000# maximum gross rule for hazardous material now included in the Hazardous Material Regulations of the DOT to allow the use of 286,000 gross tank cars to transport the returned solvent. Mac
Murphy,
The 263,000 pound limit for tank cars transporting hazmat was put into the rules in the early to mid 1960's as a result of the "chain reaction" type accidents with 112/114 tank cars transporting Liquefied Petroleum Gas. At the time no one really knew why these results were occurring, and someone wrote this rule to look like they were doing something. The practical effect was to prohibit 6 and 8 axle tank cars of about 60,000 gallon capacity in hazardous material service. It had no effect on four axle cars, which at the time had a maximum gross weight of 263,000 pounds.
Today typical four axle cars gross 286,000 pounds, and carry 110 net tons. Given the history, I think a shipper applying for an exemption to bring back solvent in the context of unit trains of tar sands would very likely be granted the exemption. No exemption would be needed for the head haul as crude is either non regulated, or combustible, depending on the flash point.
I believe it would be possible to haul the oil by rail without thinning, as would be required with a pipeline. The elimination of the need for thinning might make the rail option cheaper than the pipeline option.
Bucyrus I believe it would be possible to haul the oil by rail without thinning, as would be required with a pipeline. The elimination of the need for thinning might make the rail option cheaper than the pipeline option.
Much of the shallow oil sands are surface mined, and are thinned as part of the sand/oil separation process. However, other oil is produced as liquid thru underground steam injection. While it may be possible to ship this in tank cars un-thinned, the refineries are really geared up for the syncrude that has been thinned. It's part of what makes this goo salable.
You may be right, but I am not convinced that the thinning at the source is necessary to separate the sand. Nor am I convinced that the receiving refineries require a thinned product, or could not be easly modified to handle product that is not thinned.
The only clear references to thinning that I have seen say that the need for thinning is to make the oil flowable for pushing it through a pipeline.
So I am speculating that a whole different handling concept might be developed for rail that would eliminate the need to thin the oil for shipping.
Bucyrus You may be right, but I am not convinced that the thinning at the source is necessary to separate the sand. Nor am I convinced that the receiving refineries require a thinned product, or could not be easly modified to handle product that is not thinned. The only clear references to thinning that I have seen say that the need for thinning is to make the oil flowable for pushing it through a pipeline. So I am speculating that a whole different handling concept might be developed for rail that would eliminate the need to thin the oil for shipping.
Upon further reading I find some separating processes use thinning and some don't. However, all the bitumin then goes to an "upgrading" process which converts it into syncrude. This process converts it into something resembling crude oil that refineries can use. It also removes some of the nasty stuff like sulpher and metals. Even companies like Shell who have both tar sand projects and far away refineries do it this way. I would imagine that Canada provides the incentives for this extra processing to make this non-conventional oil attractive. Here is a link that shows an example of the upgrading process: http://www.bechtel.com/assets/files/PDF/DetailDesign.pdf
Mike,
That is an interesting and informative process diagram. I am not sure what is driving the logistics of the process, but it sounds like a portion of the refining or processing is done at the mine and then the product is shipped to the refinery to undergo the rest of the refining and processing. At least part of the reason for the mine processing is to make the product flowable for movement through the pipeline.
So I have these questions:
1) If a new rail handling option were developed that did not require the product to be flowable, would it reduce the overall cost of the processing/refining process that is conducted both at the mine and at the refinery?
2) If it would reduce the cost, would it be enough to tip the transport cost advantage from pipeline to rail?
I don’t have the answers, but I speculate that the answer to item #1 is yes. If so, part of the answer to item #2 would depend on how much investment would be required to develop the new rail handling option.
But, in any case, I would guess that a considerable investment would be required to upgrade just the traditional rail tank car transport in order to be able to handle the new tar sands traffic if it ships by rail.
The crude from the tar sands is also diluted with NGLs (LPG and natural gasoline), which is unlikely to have much benzene. Since this is just another form of hydrocarbons, it is probably stays with the tar sands crude until it is refined and treated like any other intermediate or product.
http://www.keyera.com/GasPlants/ADT
"No soup for you!" - Yev Kassem (from Seinfeld)
While it is true that as a consequence of the upgrading process that the oil is made flowable, the main thing the process does is "dress-up" the goo so that it can be processed in a refinery like normal oil. You might notice that the process in the diagram uses hydrogen to lighten the oil rather than using lite oils to thin it. But let's say that we take the heavy oil as is, after oil/sand seperation, and send it by rail car to a US refinery. Since the upgrading process is normally an in-field process, and the bitumen isn't actually oil, the refinery may need additional permits for operations outside the normal scope of a refinery. Since the new process involves things like removing sulfur and other obnoxious products, public opinion would be against it. Since refineries often already have problems maintaining air quality, its hard to believe they would want to take on the added headaches, when presently it is already done in the Canadian wilds. My observation (after observing oil companies for 30+ years) is that they like to solve problems, not to look for them. But there are also some of them that go against the grain, so I'll never say never.
Citation, please and a very credible one/.
MidlandMike tdmidget: Contamination is not a problem with pipelines. Products are separated by a pig or slug of water.... Cross-contamination of different products thru a pipeline is an added cost problem. It either produces a transmix which results in reprocessing or at least a downgraded product, or in the case of a water spacer, a slug of water to treat and dispose of properly.
tdmidget: Contamination is not a problem with pipelines. Products are separated by a pig or slug of water....
Citation Please. And a credible one. Or put a cork in it.
tdmidget MidlandMike: tdmidget: Contamination is not a problem with pipelines. Products are separated by a pig or slug of water.... Cross-contamination of different products thru a pipeline is an added cost problem. It either produces a transmix which results in reprocessing or at least a downgraded product, or in the case of a water spacer, a slug of water to treat and dispose of properly. Citation Please. And a credible one. Or put a cork in it.
MidlandMike: tdmidget: Contamination is not a problem with pipelines. Products are separated by a pig or slug of water.... Cross-contamination of different products thru a pipeline is an added cost problem. It either produces a transmix which results in reprocessing or at least a downgraded product, or in the case of a water spacer, a slug of water to treat and dispose of properly.
http://www.alliedenergycorp.com/transmix-processing.php
Nothing at all to indicate that this is a problem. It is standard equipment at every pipeline terminal. This is like saying that the hose on a gas pump is a "problem".
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